Unfortunately, this type of care is extremely expensive, and for many Americans, downright unaffordable. Most seniors simply don’t have the average $100,000 a year for a nursing home, $45,000 for assisted living, or $33,000 for in-home care.
“The out-of-pocket costs of such assistance can be catastrophic, and few people have the necessary resources…to meet this need,” concluded the report of a nonprofit working group called the Long-Term Care Financing Collaborative.
For some, private insurance has helped cover those costs. The average premium today is $2,050 a year for a 55-year-old man and $2,700 for a woman of the same age — with premiums rising 25% to 100% annually. Long term care insurance will never be as affordable as it is right now.
Many people mistakenly believe that Medicare covers long term care. (It does pay for the first 100 days of skilled nursing care following a hospitalization, but nothing more.) Medicaid — the federal health program for the poor — covers skilled nursing care for lower-income seniors, but does not pay for assisted living. Many middle-class seniors are forced to impoverish themselves by exhausting their hard-earned savings simply to qualify for Medicaid.
Families, too, make undue financial sacrifices to provide in-home care to seniors — by forgoing paying jobs or leaving the workforce early. “Retiring early to take care of an aging [family member] can have enormous negative consequences on caregiver retirement finances,” says the National Active and Retired Federal Employees Association (NARFE). A woman retiring early to provide a relative with long-term care loses an average $324,000 in retirement income, while a man loses $284,000, according to caregiver advocate and radio host Toula Wootan.
Arguably, Long-Term Care is one of the greatest financial risks faced by your everyday American.
About Valley Forge Captive Advisors
Valley Forge Captive Advisors is a commercial insurance brokerage and risk management firm specializing in member-owned group captive insurance companies in King of Prussia, PA.