Who Will Care for You When You Can’t Care for Yourself?



Long-Term Care Insurance is being recommended by financial planners, CPA’s, insurance advisors and attorneys for similar reasons.  They all have clients, family members and friends who have been financially ruined through needed home care, assisted living, adult day care and nursing home care.  The client mindset was “Nothing will ever happen to me.”  They may be young, old, married, or single. They likely worked, invested and saved, but were wiped out within months or years of an illness or accident.  That financial impact is not borne by one person alone; the physical, emotional and financial burdens affect their spouse, partners and children.


None of us wants to think that we will ever need personal care assistance. We equate nursing home, assisted living, and in-home health care as being reserved for the dying. It’s scary to seriously talk about our own mortality. Over the weekend I washed both of our cars, mowed the lawn and cut some fire wood. What will I be able to do a month from now, or 10 years from now? People fail to recognize that their health, and that of their spouse, can change in minutes.  Your financial planning needs to prepare you for those changes.


Forty percent (40%) of people needing long-term care today were working age adults, ages 18-64! These are people who suffer with MS, brain tumors, aneurysms, Lou Gehrig’s disease, strokes, or traumatic injuries. There are famous people who have needed this care such as Christopher Reeve (due to sporting accident), Mohammed Ali (with Parkinson’s disease at age 54), or Annette Funicello (sufferings with MS). Most commonly the people needing long term care, a short time ago, were functioning like you and I.



It is the care needed due to an illness, accident or chronic condition.  This care maybe provided in a nursing home. The average annual nursing home cost in Rhode Island is $101,000. However, only 15% of long-term care is provided by a nursing home.  85% takes place in the community – mostly at home with family members, some in adult day care, and the fastest-growing form of long-term care is from assisted living facilities. A one bedroom assisted living facility costs around $60,000 a year.  And the cost for a home-care provider is averaging $24/hour.




Unfortunately, most long-term care expenses are paid out of people’s pockets. It usually comes from money a couple has saved as they planned for their retirement. Perhaps it came from the forced sale of personal property or other investments. As a last ditch source it could be paid by Medicaid. Medicaid is the welfare program that pays for long-term care after you have exhausted all of your money and other financial resources. Long -term care is not covered by Medicare or Medicare supplements, or other insurance like health insurance, HMOs, disability income insurance, retiree health plans, or VA plans.  Those plans only pay for skilled medical care, and most long-term care is just maintenance, chronic care such as helping someone bathe, dress, move around, go to the bathroom, etc.



The odds of needing some type of long-term care today are greater than 50%!   That’s 1 out of every two 2 people you know. For most of us, the long-term care we receive will not be nursing home care, because most people will never be in a nursing home; if so, their stay is usually short term. Depending on how long you require that care, home health care can cost just as much, or more, than nursing home care.


Reality is that one spouse often cares for the other the best they can at home using their own “blood, sweat, and tears” aided by other home care resources until conditions deteriorate. They then place that spouse in the best available facility. Too often the costs for that facility adversely cut into the resources left to care for the other spouse.




Long-term care insurance is similar to life insurance.  You pay a premium to an insurance company for a specified maximum benefit level. In return, they guarantee that when you need care, the funds will come from them, not your life savings.  Long-term care insurance is nothing more than a pool of money at your disposal to be used when you need home care, assisted living, adult day care, or a nursing home.


The biggest factor in determining your cost is tied to how much benefit you think you will need.  But, like life insurance, your rates are also based on age and health. The younger that you are when you purchase the policy, the lower the rate.  Buying it early guards against cost prohibitive rates should you develop an adverse health condition after the purchase. That early purchase may also establish a fixed premium as future rates will continue to rise.




There are less than 20 insurance companies that sell long-term care insurance.  Look for a carrier that has been involved in the long-term care field for several years, has a good track record of paying claims and has strong financial ratings.  Some of the current top carriers are:  John Hancock, Genworth, Mass Mutual, Mutual of Omaha and Transamerica




Look for an independent or broker representing several insurance companies so that you have options.  The broker will analyze your particular needs and show you the companies that can offer you the most benefits and for the lowest premium for your needs.