Home > Employee Benefits > Long term care and planning – thinking ahead to protect your future

Long term care and planning – thinking ahead to protect your future

With the average cost for a private room in a Massachusetts nursing facility at around $134,000 per year, long-term care expenses may catch many people by surprise, especially as the costs accumulate over time. Within five years, an individual will have paid over half a million dollars in out-of-pocket expenses for full-time nursing care. Even for those who opt to live at home and hire a health aide to administer their care, the median annual rate for Home Health Aide Services runs just under $60,000. Add to that the cost for homemaker services (cooking, cleaning, laundry, etc.) and/or adult day care and the costs are well over $100,000.

While many people rely on retirement savings to help cover their long-term care, proper planning and budgeting for the future becomes even more critical for spouses who need care together, or if one person ends up caring for the other. Spouses living together in a private room at a nursing facility can expect to pay about $300,000 each year – that’s just under $1.5 million over five years. Now is probably a good time to stop and ask – do my spouse and I have this kind of money saved for future long-term care?

Fortunately, long-term care policies can help fund care for individuals and families, helping to relieve some of the overwhelming costs of aging. For women, the costs are particularly challenging. Insurers have increased premiums on long-term care policies for women, who specialists say tend to generate more long-term claims (and more expensive claims) than men. Last year, two-thirds of all long-term claims were paid to females, and women typically 50% more than men in states where gender specific pricing has taken effect. The problem becomes two-fold for women who end up taking care of their spouses and then must cover their own long-term care. One solution to this issue may be to purchase a shared benefit policy where the couple has a joint pool of money saved for care. Hybrid policies are another viable option. In this situation, a woman purchases a life insurance policy with a long-term care rider. Hybrid policies have become increasingly popular since they include a combination of both a long-term care and death benefit, and neither benefit is forfeited should it not be used.

For more information on best practices and strategies for long-term care planning, contact your WGA team.


About the Author

Christine Vogan is the Key & Individual Insurance Representative at William Gallagher Associates in Employee Benefits Group with a core focus on WGA’s Private Client Group. Her responsibilities consist of working with both individual clients and executives at corporate companies and assisting them with the Life, Disability and Long Term Care insurance planning.

617.646.0366 | CVogan@wgains.com | Connect with Christine on LinkedIn
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