Most Americans cover long-term care costs by spending down assets, but proactive planning can help ease this burden.
A large portion of Americans — about 70% of people turning 65 — will likely need long-term care at some point, according to findings from the Urban Institute and the Department of Health and Human Services. The high cost of such care is a common worry, especially since many families rely heavily on savings or retirement funds to cover these expenses.
Stacey Hachenberg, 58, and her partner, Sharon Fleming, 53, have faced the challenge of managing long-term care for their parents. Recently, Hachenberg’s father needed two years of assisted living care. Thankfully, his pension, veterans benefits, and savings helped with the costs. However, the benefits took about a year to obtain, even with assistance from the facility in navigating Veterans Affairs’ application process.
Without her father’s modest savings, Hachenberg says they would have struggled to meet the costs. Many families are in similar situations, often finding themselves financially strained when covering care for a loved one. And for those lacking personal savings, the challenge of funding long-term care can be even more daunting.
Planning ahead is key to avoiding such financial difficulties. Options like long-term care insurance and hybrid life insurance policies can provide coverage specifically for future care. However, premiums for these policies can be high, making them inaccessible to some individuals. It’s crucial to evaluate potential costs early on to prepare effectively.
Other alternatives to consider include Medicaid, which can cover long-term care for individuals who meet certain income and asset limits. Although the application process for Medicaid can be complex, particularly when navigating rules around assets and income, it offers a valuable option for many.
Some families also choose to rely on family caregiving, where relatives provide care at home, which can help reduce costs. However, family caregiving can place emotional and physical stress on family members, underscoring the need for support and resources.
In any case, having a plan in place can ease some of the stress and financial burden, giving families greater flexibility and peace of mind as they face the realities of long-term care needs.
