Your estate planning should include a plan for long-term care.Most Americans do not know the facts surrounding their potential need for long-term care.  This was confirmed recently in a telephone survey of 1,735 Americans over the age of 40, funded by the SCAN Foundation and conducted by the Associated Press (AP) – NORC Center for Public Affairs Research.

Most People Need a Plan for Long-Term Care

According to the Genworth Cost of Care Survey of 2015, 70% of Americans over the age of 65 will eventually need long-term care.  By the year 2040, 22% of the population will be over the age of 65.  This survey showed most people over 40 don’t believe they will ever need long-term care.

Coordinated Care Best Approach

The survey defined person-centered care as “an approach to health care and supportive services that allows individuals to take control of their own care by specifying preferences and outlining goals that will improve their quality of life.” This approach points to the consideration of coordinated care.

Coordinated care involves communication among various medical providers to reduce overlap, misdiagnosis or other medical oversights.  Because many people don’t have a plan, they miss out on the benefits provided by this approach. The survey shows a lack of appreciation for the improved quality of life it can provide.

Cost of Long-Term Care

The study showed most people don’t understand the coverage for long-term care provided by Medicare, Medicaid and private health insurance.  Medicare does not pay for ongoing long-term care, although it will pay for intermittent stays at nursing facilities.  Yet, 34% surveyed thought Medicare would pay for long-term care.

Medicare doesn’t typically pay for care in the home.  However, 36% of those surveyed thought it would.

Most health insurance plans will not cover long-term services like a nursing home or ongoing care provided at home.  Yet, 18% of Americans age 40 and older believe that their insurance will cover the costs of nursing home care.  25% believe their plan will pay for care at home.

Medicaid is the largest payer of long-term care services. Medicaid is a federally and state funded needs-based benefit that covers various types of long-term care depending on the state’s regulations.  In 2013, Medicaid paid for 51% of the national long-term care bill.  However, 51% of Americans age 40 and older reported that they don’t expect to rely on Medicaid to help pay for their ongoing living assistance expenses as they age.

The actual costs for long-term care are staggering.  The Genworth Survey found that for 2013 the average bill for a nursing home was about $80,300 per year and home health care cost about $44,616.

Planning for Long-Term Care

The survey showed that two-thirds of Americans over the age of forty (40) have no plan for long-term care.  It seems likely that many Americans are reluctant to face the possible loss of independence related to aging and therefore don’t plan for this possibility.

While nearly 65% of people surveyed had planned or talked to loved ones about their funeral arrangements, only 42% had planned or discussed long term care. Just 33% had saved money for long-term care.  It seems that  how we want to be memorialized is easier to think about than how we may end up dependent on others.

Don’t Ignore the Need to Plan for Long-Term Care

Although not a popular topic among Americans over 40, a plan for long-term care is important.  If you, a loved one or a client needs help figuring out the options, please think of us.  We can help and we are always happy to hear from you.