Americans understand the need for LTC, just not how to pay for it

A recent study reveals that many Americans acknowledge their potential need for long-term care, but do not understand their options to afford such care. Many consumers who had overseen the long-term care of a loved one recognize the impact and financial strain long-term care can cause their family, and 36 percent of survey respondents with assets of less than $100,000 fear they will be a burden to their family.

Only 39 percent felt confident that they have planned for the costs of long-term care. Of those over 65-years old who have planned for these costs, 55 percent say they feel more confident generally.

The Lincoln Financial Life Stages Survey: Long-term Care found, through a survey of 1,002 Americans, that 65 percent felt it was important to plan for long-term care, yet less than half (44 percent) actually have a plan. Of the survey respondents who did have a plan, they were primarily dependent on increasing some form of savings. Nearly three-fourths, or 73 percent of Americans, said their lifestyles would change in order to pay for long-term care. Over half said they were willing to sell their homes, while 21 percent said they would be willing to accumulate debt, and 18 percent said they were willing to declare bankruptcy in order to qualify for government aid like Medicaid.

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“The survey shows consumers are not aware of all of the funding options they have to pay for long-term care. Unfortunately, many do not realize that programs like Social Security simply will not cover all those costs,” said Mark Konen, President of Insurance & Retirement Solutions, Lincoln Financial Group.

With an average savings of $120,000, most American families could not afford long-term care for an extended period of time, since costs can easily exceed $60,000 in a year. However, the majority of respondents, at 75 percent, said they would use their savings to pay for the costs of long-term care, revealing that many Americans are simply unprepared for such financial burdens.

For those who had overseen the long-term care of a loved one, 26 percent said their loved one had to sell their home in order to pay for their own long-term care. Others sold their cars (21 percent), stopped donating to charity (32 percent), and stopped going out to dinner (33 percent). While some of the survey respondents had heard of long-term care insurance, it ranked seventh amongst likely sources for long-term care funding.

“As Americans live longer and healthcare costs continue to rise, the issue of long-term care takes on greater importance,” said Lou Moore, a Lincoln financial planner with Lincoln Financial Advisors. “The emotional burden of taking care of a loved one is difficult enough without having to also worry about the financial impact. The good news is there are funding options that can provide the flexibility consumers need when planning for unexpected long-term care needs.”

Written by Kelly Mellott

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  • At best this is a difficult subject. Clearly insurers see the need, the benefit, the security, and everything positive about LTCi. Yet many senior advocates have a differing view.

    Like HECMs, LTCi is not for everyone. It would be interesting to hear the subject “debated” by those who “know.”

  • At best this is a difficult subject. Clearly insurers see the need, the benefit, the security, and everything positive about LTCi. Yet many senior advocates have a differing view.

    Like HECMs, LTCi is not for everyone. It would be interesting to hear the subject “debated” by those who “know.”

  • LTC: when you need it, you can’t get it.

    Having arranged for my mother’s round-the-clock care during her final 18 months, I have witnessed first-hand what an expense that can be. Fortunately, my father’s retirement income was sufficient to pay the cost of my mother’s care, with a nominal contribution from their savings.

    My wife and I won’t enjoy a defined-benefit retirement plan as did my parents. We must rely on our savings, investments and — yes — LTC coverage to be certain we can afford the care we hope we won’t need, without burdening our children or spending down our wealth before we go on Medi-Cal.

    Under California’s Partnership for Long-term Care, our LTC policies provide us with an added benefit of Medi-Cal asset protection. I understand other states offer or are considering similar programs. To learn more about the California Partnership plans, go to: http://www.dhcs.ca.gov/services/ltc/Pages/CPLTC.aspx

    • HECM Dude,

      Some are very concerned if California will be able to honor all of its promises. If this was a contract with the feds, that would be entirely different. Of course, much of worry is for naught.

  • LTC: when you need it, you can’t get it.

    Having arranged for my mother’s round-the-clock care during her final 18 months, I have witnessed first-hand what an expense that can be. Fortunately, my father’s retirement income was sufficient to pay the cost of my mother’s care, with a nominal contribution from their savings.

    My wife and I won’t enjoy a defined-benefit retirement plan as did my parents. We must rely on our savings, investments and — yes — LTC coverage to be certain we can afford the care we hope we won’t need, without burdening our children or spending down our wealth before we go on Medi-Cal.

    Under California’s Partnership for Long-term Care, our LTC policies provide us with an added benefit of Medi-Cal asset protection. I understand other states offer or are considering similar programs. To learn more about the California Partnership plans, go to: http://www.dhcs.ca.gov/services/ltc/Pages/CPLTC.aspx

  • I’m 52 and purchased a comprehensive policy 3 years ago. At that time my son was 22, and he obtained a policy that was way better then mine, for a lot less. The two of us feel a lot more comfortable knowing we’re covered.

    Several of my past clients got their Reverse Mortgages so they could afford the premiums for Long Term Care insurance, and they’re comfortable knowing they’re covered too.

    • Raymond,

      While there has never been a life insurance policy in the US which has not been honored, some question whether LTC policies will be the same.

  • I’m 52 and purchased a comprehensive policy 3 years ago. At that time my son was 22, and he obtained a policy that was way better then mine, for a lot less. The two of us feel a lot more comfortable knowing we’re covered.

    Several of my past clients got their Reverse Mortgages so they could afford the premiums for Long Term Care insurance, and they’re comfortable knowing they’re covered too.

  • I like seeing content concerning LTC on this site. The LTC world and the reverse mortgage world should be working very closely with each other but they are not…In the comments above, no one even mentioned it.

    Like our world, the LTCI world is being redefned right now. The reverse mortgage is certainly not the answer for everyone when it comes to private pay LTC or assisting a client with paying for LTC insurance. But it certainly is an option for many.

    The introduction of the HECM Saver should make the reverse mortgage a possible option for this situation as well as others.

    As always it comes down to “suitability” and doing right by the client.

  • I like seeing content concerning LTC on this site. The LTC world and the reverse mortgage world should be working very closely with each other but they are not…In the comments above, no one even mentioned it.

    Like our world, the LTCI world is being redefned right now. The reverse mortgage is certainly not the answer for everyone when it comes to private pay LTC or assisting a client with paying for LTC insurance. But it certainly is an option for many.

    The introduction of the HECM Saver should make the reverse mortgage a possible option for this situation as well as others.

    As always it comes down to “suitability” and doing right by the client.

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