If living longer is one of the great success stories of medicine and lifestyle changes, failing to plan for later-life care is one of the great failures. Relatively few people have any kind of plan for how they will take care of themselves or their spouses in old age. And even those who have been thoughtful are not likely to have set aside adequate resources to provide care that can easily top $100,000 a year.
The health reform law included a disputed long-term care insurance program called the Community Living Assistance Services and Supports program (CLASS Act). It would have allowed employees to voluntarily buy long-term care insurance and receive modest benefits that, for many, would have provided a welcome support for old-age care needs. Because the program would have been voluntary, however, it was thought that mostly sick people would enroll and almost certainly file for benefits at some time. Without premiums from healthier people to support those claims, there was no way to pay out the expected care benefits without raising premiums so high that few people would want to buy the insurance. So, the government recently shelved the program.
Ending that effort, however, doesn't change the reality that the nation's fastest-growing age groups—people over age 65—are moving in large numbers toward a likely encounter with some form of extended care. Most will need such care at some point in their lives, with projections running as high as a 70 percent likelihood. Yet much smaller percentages think they will need such care, and a still smaller group is doing anything about it.
Genworth Financial, a major seller of long-term care insurance, just issued a "2011 Financial Reality Check Study" that urges people to stop being in denial about their eventual need for care. Three-fourths of adults surveyed for the study have never had a conversation with family or friends about long-term care, and nearly as large a percentage—73 percent—would not know what to do if a family member needed such care. This is “an alarming statistic considering that 6 out of 10 people will need long-term care sometime during their lifetimes,” the company said.
Beyond financial issues, the demands of caring for an ailing family member are often extensive and both physically and emotionally demanding. A workable plan should include this caregiving component, but most people are far more likely to stumble into becoming caregivers. The overwhelming burden for such care falls on women.
There is no precise time when people should begin thinking seriously about their long-term care needs. The survey found that most people did so between ages 45 and 65. However, a large number of people were jolted into action after a serious and unforeseen long-term care event happened to a friend or family member.
Beyond talking with family members and framing caregiving plans, Genworth said, people also need to research the different types of long-term care and what they cost.
Each year, Genworth and MetLife issue extensive surveys of long-term care costs. The predictable results: Long-term care continues to get more expensive. This, of course, has scary implications about how we will pay for in-home care providers and the extended stays in nursing homes and assisted-living facilities that are part of our demographic destiny as the nation's longest-living generation.
Genworth's 2011 Cost of Care study was released last May. It includes costs from more than 400 places in the United States and a tool that lets users compare current costs and projected price trends for several areas at a time.
MetLife just issued its 2011 study. It found that long-term care costs have continued to increase, often by rates in excess of overall healthcare inflation (which already are higher than overall inflation levels).
"National average rates for a private nursing home room increased 4.4 percent to $239 daily or $87,235 annually, in 2011," the company said. "Assisted living base rates rose by 5.6 percent to $3,477 monthly or $41,724 annually. Adult day services went up by 4.5 percent to $70 per day. Home health aides and homemaker/companion service rates were unchanged at $21 and $19 per hour."
"The result is dramatic protracted inflation that will impact consumers," said Sandra Timmermann, director of the MetLife Mature Market Institute, which oversees the company's aging and retirement research. "As the cost of care continues to rise, Americans need to discuss long-term care planning with their families now, to ensure they receive the kind of care they want in the future," she added. "This is especially critical at a time when retirement savings rates are low."
Corrected on 11/02/11: A previous version of this article incorrectly stated the likelihood of seniors eventually needing long-term care. According to Genworth Financial, 6 out of 10 people will need long-term care.