Long-term care: Your questions answered

It’s understandable to have questions about long-term care. Let’s start by defining what long-term care is. Long-term care is defined as assistance with the tasks of daily living, which may include bathing, grooming and mobility.

Since long-term care is often the outcome of a chronic illness (e.g., dementia or diabetes) it’s a topic that many of us would rather not consider. However, once you take the time to discover your options, you’ll find that planning for your future healthcare needs doesn’t have to be a painful process. This article discusses some of the most common questions asked about long-term care.

Your Medicare and Medicare supplement insurance benefits do not cover long-term care services. Medicare is a federal program for Americans ages 65 years or older. It pays for doctor visits, hospital stays and medications. Medicare supplement insurance, available privately, picks up the part of expenses that Medicare does not cover. But neither of these plans will pay your nursing home or home health aide expenses if you are simply unable to perform daily living tasks.

In this context, some people may confuse Medicare with Medicaid, the government’s healthcare program for people of all ages who are deemed as medically needy. Medicaid supports the care of more than 7.8 million older Americans¹; however, to receive these benefits, you must satisfy stringent need-based criteria, including an income limit (the 2021 rule of thumb is $2,382 monthly)² and a very low ceiling on the amount of assets you own—including your investments. Anyone who has a qualified retirement plan like an IRA or 401(k) and other assets is very unlikely to qualify for Medicaid benefits. (Requirements vary by state.)

Long-term care costs vary widely, depending on the type of care you’re projecting and where you’ll receive it. For example, if you’re 45 and want to plan for five years of nursing home care in a semi-private room in Tampa, Florida, you’ll be looking at about a cost of $105,997 annually. The same care in New York would be $143,585 and $68,028 in Arkansas.³

Depending on your financial circumstances, you may opt to pay these costs with your investment assets or by buying long-term care insurance. First, work with your financial advisor to create a realistic estimation based on where you plan to reside at the time (Healthcare costs vary widely by state.), inflation and the type of care you prefer. You can get ahead of this conversation by checking out long-term care costs by state.³

Once you have your financial projection, you’ll be better prepared to make a plan for how you’ll be cared for when the time comes.

Yes, long-term care insurance covers home care. The first idea to throw out the misconception that long-term care is a place. Actually, it’s a process that can happen in a nursing home, in an assisted living/residential care community, or wherever you’ll be calling “home” when the times comes. In fact, 82% of those receiving long-term care reside at home, either alone or with family.⁴ Especially since the basics of long-term care center on core functions of daily living, such as bathing, grooming, dressing and eating, the focus is typically more on who provides the care, rather than where you’re receiving it. If home care is what you prefer, then starting to plan early can support this preference.

What’s more, long-term care isn’t necessarily administered by professional care workers. Many paid caregivers are family or friends.⁵ They may be compensated for their caregiving through private long-term insurance coverage or Medicaid, depending on state-level rules and regulations.

Yes, it’s helpful to include your family in the decision-making process. Talk with your family now about your future care, make a plan, and share it with them long before they need to carry it out with you—even if it makes you uncomfortable. That way, when and if the time comes, you have a plan in place and your family can focus on you. Likewise, you and those you care about can focus on being a family, instead of on the details of your care.

It’s never too early to plan. Think about it: A solid long-term care plan can help inform many of the decisions you make in the years leading up to your possible care. Say, for example, you and your spouse are in your early 60s and thinking about a new home. Will you move to the three-floor Victorian of your dreams that’s a plane ride away from your potential caretakers, or downsize into a condo near them? Or if you plan to fund your care with investments, you can plan them to stagger their returns, providing an ongoing cash stream.

On another level, your long-term care can be an emotional topic, so having as much time as possible to consider it may be a big help to you and your spouse, family and friends.

Now that you’ve learned some basic facts about long-term care and how to plan for it, you’ll feel better prepared for putting a plan in motion, whether that involves paying for care yourself or buying long-term care insurance. Either way, having a plan in place can give you a greater sense of confidence about the future. In fact, it may just be a major relief.

Connect with a Thrivent financial advisor to discuss how you can work a long-term care plan into your overall financial strategy.