Ideas to Fund Long Term Care

Long term careDue to increased life expectancies, today’s 65-year-olds will need on average close to $200,000 to cover long-term care costs. (Long-term care refers to care that is not covered by Medicare – typically assistance with Activities of Daily Living, such as cooking, dressing, bathing, toileting, and transferring.) Many don’t and won’t have this much money. For others who do, it could still leave their spouse or partner with very little to live on. For the extreme cases of dementia or Alzheimer’s diagnoses, costs could go even higher over many years, making a significant dent in even a wealthy person’s bank account. Few people have that kind of money set aside. Only 11% of Americans have long term care insurance. This article outlines a Bipartisan Policy Center report on solutions to the long-term care issue. Thanks to ReunionCare for tweeting this link.

Want to know how your state ranks in terms of quality of life in your 80s and 90s for you and those who may be your caregivers? Visit AARP’s state scorecard for long-term care and end-of-life quality here:

 What are your thoughts on long-term care? Do you have long-term care insurance? Why, or why not? 

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It Won’t Happen To Me

Optimism bias. I would not label myself as “optimistic.” But I am not pessimistic, either. To me, “optimism” conjures up the chorus from the R.E.M. song: “Shiny, happy people holding hands.” Not the image of how I approach life. No, I do not believe things will get better and better, but I do not believe they will get worse and worse. I believe, like most human beings, that they will stay the same. This is one version of what behavior experts call “optimism bias.”

If it was sunny yesterday, it will be sunny today. If I am healthy today, I will be healthy tomorrow. In fact, I will be healthy forever. Ok, not forever, but for the foreseeable future. Well, ok, maybe not. But probably nothing will go wrong. I am 47 years old and in good shape.

In December I had my checkup. Everything was sailing along as the doctor checked my blood work. Normal, normal, normal. (Yeah, yeah, yeah, why do I even get physicals? I am normal and have been all my life. Things will stay the same.)

Then she paused. “Ok, Holly, so what we have here is an elevated….” (What? Wait, this sounds permanent. As in chronic, but not life-shortening. Great, I have to take a pill now.) Things will stay the same. Until they don’t.

At a symposium last Monday, I heard Dr. Lisa D’Ambrosio from MIT’s AgeLab describe her research on aging and driving. Imagine you live 200 miles away from your 81-year-old father. When you visit, a few things seem a little off. Maybe he shouldn’t be driving that clunker he loves so much. But you have to get back home. Surely things won’t get worse. And you won’t have to confront him. Things will stay the same.

Lately the Dow Jones Industrials have climbed to record highs. People are piling in. Stocks went up yesterday. They will go up tomorrow, right? Things will stay the same.

It is not possible to hedge against every unforeseen event. However, we can look at the stats on what events are more likely than others. You live in Florida on the water, you are more likely to have wind and flood damage. Both of your parents and their parents had cancer, you are more likely to have cancer. Afraid of flying? You are more likely to be killed on the way to the airport than on the flight. Have longevity in your family? Dementia is more likely to be part of your future.

One of the areas I receive the most resistance from is long term care insurance. I do not sell long term care insurance. I just try to get people over 50 to buy it if a $500,000 – $900,000 dent in their future net worth might impoverish them. It is difficult, though, to plunk down premiums of $4000-$6000 now for some unknown so far in the future. This is optimism bias at its worst. Once you begin to show small symptoms, it is too late. You cannot get coverage. Got a parent or spouse with optimism bias? Insurance coverage may not be the prettiest gift, but it may bring the most gratitude later.

For the middle stages of Alzheimer’s, when we can dress and bathe ourselves, but cannot be left alone, there is no caregiving coverage from Medicare nor Medicaid. Asking a family member to serve in this role is asking a lot.

Long term care insurers are the only outside source available for covering in-home caregivers, who will be in high demand by 2030. At $15 per hour, even twenty hours a week in the early stages adds up to $1200/month (in today’s dollars). The average life expectancy from diagnosis is eight to ten years. (See the website of the Alzheimer’s association: for the seven stages of dementia). And insurers are getting more picky.

If you can’t imagine yourself needing a caregiver, a wheelchair, or even a daily pill, that’s human and that’s ok. Just think about the statistics, though, for those you love. Might it make sense to spend something now to avoid regret later? One thing I know: things stay the same, for a while, until they don’t.

Continue ReadingIt Won’t Happen To Me