As we age, the need for long-term care becomes increasingly likely. In fact, it’s estimated that at least 70% of people who are 65 or older today will require some form of long-term care in their lifetime.

Despite this striking statistic, misconceptions around long-term care and long-term care insurance often prevent people from obtaining proper coverage and planning for future needs.

Here we will explore and dispel four common myths surrounding long-term care and shed light on the importance of considering long-term care insurance as part of your comprehensive financial plan.

What is Long-Term Care & Long-Term Care Insurance?

Long-term care is defined as the custodial services and support needed when one can no longer perform the basic activities of daily living without personal assistance. These basic activities are defined as the 6 activities of daily living (ADLs), which include:

• Bathing
• Dressing
• Eating
• Toileting
• Transferring
• Continence

The other trigger for care is a cognitive disorder diagnosis requiring substantial assistance.

Long-term care insurance provides readily available, tax-free funds to pay for any custodial care needed such as home health care, adult day care, assisted living, nursing home care, or hospice care.

Myth #1: Long-Term Care Insurance is Too Expensive

The cost of long-term care insurance is often perceived as unaffordable, deterring individuals from considering it. However, there are options available that can help keep the costs of long-term care insurance manageable:

• Start early: Investing in long-term care insurance at a younger age can help spread the cost over time.
• Find payment plans that fit your budget: There are a variety of options available that allow you to pay over a 10-year period or up front, eliminating the risks of premium increases. You can also alter the benefits to fit the premium you are willing to pay.
• Explore newer, more flexible options: The insurance market has a wider range of products available today than in the past. With this variety of options, it’s more possible than ever to find options that better suit your financial plan.

Procrastination can be costly when it comes to long-term care insurance. Planning early can allow for more affordable and flexible options.

Also, keep in mind that without insurance, medical expenses can end up costing much more than paying for insurance over time.

Myth #2: Long-Term Care is Covered by Health Insurance and Medicare

Around 56% of baby boomers believe that Medicare will pay for long-term care, while others believe these needs will be covered by health insurance. This is not the case.

Health insurance covers acute medical needs, such as care needed for a heart attack or broken bone. Medicare, the federal health insurance program primarily for those 65 and older, may provide limited coverage for short-term skilled nursing care after hospitalization. However, neither health insurance nor Medicare will cover extended long-term care services.

Long-term care services refer to custodial care, such as assisted living, nursing homes, and in-home care, which typically requires separate funding. Without long-term care insurance, individuals may have to rely on personal savings, Medicaid (for those who meet specific income and asset criteria), or other financial planning strategies to cover these costs out-of-pocket.

Myth #3: My Family Will Take Care of Me

When professional care cannot be afforded (perhaps perpetuated by the misconception that long-term care insurance is too expensive), a loved one often becomes the primary caregiver. While family care is common, it can come at a cost:

• 78% of family caregivers spend about $7,000 a year out of pocket
• 32% leave their jobs due to caregiving demands
• 23% go into debt to provide care

Proactive planning for your long-term care insurance needs can alleviate potential future burdens for your loved ones.

Myth #4: Long-Term Care is Only for the Sick, Elderly, or Disabled

Long-term care insurance ensures that all levels of assistance needs are met, ranging from help with the basic daily activities, such as bathing, dressing, and meal preparation, to complex medical care. It can be used to protect a wide range of individuals regardless of:

• Age: While aging is a common reason for needing long-term care, it is not the only factor. In fact, residents under the age of 65 have been the fastest-growing nursing home demographic over the past ten years, representing about 7% of long-term care residents.
• Health Status: Accidents, chronic, or sudden illnesses can affect people at any stage of life. Long-term care needs may arise from unexpected health events, regardless of previous health status.
• Disability: Disabilities can necessitate long-term care and may occur suddenly or develop gradually over time. The onset of a disability isn’t always predictable, emphasizing the importance of being prepared.

No matter an individual’s age or preexisting conditions, long-term care insurance can be a viable option to make sure your family is prepared for a range of possibilities. It’s a tool for maintaining control over your lifestyle and care choices.

Planning for Your Long-Term Care Insurance Needs

Long-term care insurance can be a crucial piece of the puzzle when it comes to comprehensive financial planning. It’s essential to:

1. Start planning early to access more affordable options
2. Consider flexible payment plans that fit your budget
3. Explore modern insurance products that align with your financial goals
4. Understand the limitations of health insurance and Medicare regarding long-term care
5. Recognize the potential impact on family members if long-term care is needed

By addressing these factors, you can make informed decisions about long-term care insurance that protect your assets and ensure quality care when needed. Cassaday & Co.’s Advanced Strategies team is dedicated to assisting clients in making informed decisions regarding insurance that align with their overall financial goals.

Remember, the cost of not having insurance when you need care can far outweigh the cost of premiums. Take the time to evaluate your long-term care insurance needs as part of your overall financial strategy.

As part of our comprehensive approach to financial planning, our Advanced Strategies team provides clients with a complimentary insurance audit. This audit includes an in-depth analysis of any life, disability, and long-term care insurance policies so that clients can understand their coverage and determine if it is sufficient and aligns with their financial goals.

If you are a Cassaday & Co. client and would like to talk to our Advanced Strategies team, please contact your advisor. If you are not yet a Cassaday & Co. client, but would like to consider becoming one, please click here.

By Alex Cordoba, CLTC®

Disclosures: Facts presented have been obtained from sources believed to be reliable.  Cassaday & Company, Inc., however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.