Predicting the Costs of Long Term Care
Imminent health care reform may include a long term care plan that consumers can buy into. The benefits offered are likely to be helpful but inadequate. How inadequate? You can find out by using an online long term care cost estimator.
60 percent of Americans over age 65 will require at least some type of long term care services during their lifetime.
Once you reach age 65, you have a 40 percent chance of entering a nursing home.
Approximately 10 percent of folks who enter nursing homes will be there for five years or more.
68% of Americans have a family member or friend who has received long term care in the past three years.
If that doesn’t scare you into considering the purchase of long term care insurance, Northwestern Mutual has introduced a long term cost calculator that may do the trick.
The data used by this calculator was compiled by the Northwestern Long Term Care Cost of Care Survey in November 2008, through the Long Term Care Group, Inc.
Further assumptions used by the calculator:
- Annual cost of home health aide based on average hourly rate, 8 hours a day, and 365 days a year.
- Annual cost of assisted living based on average monthly rate for 12 months. Annual cost of nursing facility based on average nursing home private daily room rate for 365 days.
- Five (5%) annual inflation rate for long term care costs.
I ran the calculator for myself. If I were to have a long term care event beginning at age 70 and lasting for two years, the estimated care cost in my state of Tennessee is $256,000. My current long term care insurance policy will cover only about 75% of that amount. Thus, I need to have sufficient funds available to cover the difference.
If the government LTC plan is available to us and will coordinate properly with our own coverage, we may buy into that plan as well. Why? Because insuring against financial risks is more predictable right now than most investing options.
Have you considered the costs of long term care? How are you planning to handle a worst case scenario?
FREE UPDATES: If you enjoy what you read here, please consider subscribing to receive free updates automatically by RSS feed or by email. (I promise that your email address will not be shared or used for any other purpose.)