October is Long Term Care Planning Awareness Month and, for many Americans, important information about the different options available to them could make a significant impact on their lives or the lives of their loved ones.
Long-term care encompasses a variety of services and support aimed at addressing health and personal care needs, particularly regarding Activities of Daily Living (ADLs) such as eating, dressing and bathing.
A 2023 survey from Lincoln Financial and Versta Research found that 96 percent of Americans adults believe it is important to plan for long-term care, yet only 19 percent of respondents said they had taken steps toward planning. There are many factors that play a role in this drastic disparity between the two figures.
Lincoln’s survey results indicate that people often make assumptions about their long-term care needs that do not align with statistics. For example, the survey also found that actual long-term care costs were more than double what some respondents estimated.
Additionally, Long Term Care plan options have grown in recent years to include alternatives to traditional plans, but many people today are unaware of these alternatives. This blog will dive into these routinely misunderstood aspects of Long-Term Care Planning, so keep reading to learn more.
Misconceptions About Long-Term Care
Misconception 1: “It won’t happen to me.”
Reality: People tend to unrealistically downplay their personal risk. Data from a 2020 Lincoln Financial survey found that 54 percent of respondents expect a parent to need long-term care, 37 percent expect their spouse to need long-term care, and 32 percent expect to need long-term care for themselves.
Misconception 2: “Medicare or Medicaid have me covered.”
Reality: Medicare and Medicaid coverage is restricted. Medicare will likely be insufficient, and Medicaid does not account for your choices or preferences. Sixty-six percent of those surveyed who anticipate having to pay for long-term care assistance say they will rely on Medicare, health insurance, or Medicaid, according to Lincoln’s 2020 survey.
Misconception 3: “That’s what my savings are for.”
Reality: In some cases, people significantly underestimate the costs of long-term care. An unplanned care event may drain savings two times faster than anticipated, according to Lincoln’s 2020 survey. National estimates from 2020 reveal home care options can range from just over $4,100 a month, while skilled nursing homes averages can demand nearly $8,800 a month.
Misconception 4: “My family will be able to take care of me.”
Reality: Caregiving tends to negatively impacts women in the family. Those caring for ill parents are twice as likely to experience depression or anxiety. Counting on family members to provide care may not be the best option for everyone involved. Nearly 8 in 10 respondents said they worry that they would not be able to provide adequate care if somebody in their family needed it, according to Lincoln’s 2020 survey.
Traditional vs. Non-Traditional Long-Term Care
One reason why people often prefer not to secure Long Term Care plans is because in some cases the investment funds cannot be cashed out if they go unused. These plans may be referred to as traditional LTC plans.
In recent years, however, alternatives to traditional plans have become more common. They provide more flexibility than traditional plans while still offering support in the event that long-term care becomes a necessity.
Annuities and life insurance policies can attach long-term care riders, or provisions that offer additional benefits. Although these riders are not the same as traditional long-term care insurance, they can be appealing as an alternative to traditional long-term care plans.
Some life insurance policies allow you to access the entire cash value without penalties, particularly if you are diagnosed with a terminal illness or are residing in a care facility. Other policies include income accounts that can cover long-term care expenses for over six years while preserving your cash value.
Additionally, certain annuities can potentially double or triple your cash value from the start, designating it for various long-term care needs.
Conclusion
For many people, one of the most important first steps can be simply starting the conversation with family members. There are many different options to consider and determining the right one will often involve input from those closest to you.
Our team of advisors is ready and willing to help you navigate the different options available to you, so that you can make the best decision for you and your loved ones.
Sources:
Lincoln Financial “Planning for Long Term Care” Survey from October 2020 of Advisors and Consumers
“2020 Lincoln Financial Cost of Care Survey,” March 2020
This communication contains information derived from third party sources. Although we believe these sources to be reliable, we make no representations as to their accuracy or completeness.
This communication is for illustrative purposes only and does not constitute specific recommendations regarding long-term care or related services. Moran Wealth Management® is a registered investment adviser. Moran Wealth Management® makes no assurances, nor should it be assumed, that strategies or services recommended in the future will be suitable or profitable, as individual needs and circumstances may differ. Recommendations are subject to changing conditions, and those that were appropriate in the past may no longer be relevant today. The examples provided should not be taken as personalized advice for your long-term care planning needs. It is important to consult with a qualified professional to ensure that any approach to long-term care aligns with your personal financial situation and goals. Past recommendations or strategies may not reflect future outcomes, and individual performance or needs in the area of long-term care may vary significantly. For additional information about Moran Wealth Management®, including its services and fees, send for the firm’s disclosure brochure using the contact information contained herein or visit advisorinfo.sec.gov.