Averages & LTC Planning

A short time ago, on LTC Coffee Break, I spoke with Jen Wagoner about state-sponsored long term care programs like the Washington state CARES Fund.

If you did not catch our conversation, take a few minutes to check it out.

For additional LTC Coffee Break episodes, you should go to the LTCCB Channel.

Remember, LTC Coffee Break is available on demand exclusively LTCcoffeebreak.com.

As we noted, there are a dozen other states investigating their own version of the Washington state CARES Fund. One thing that has carried through from the Washington state CARES Fund is a lifetime benefit cap of around $36,500. Remember, these are all unique to each state and still in the formative stages.

What’s this have to do AVERAGES & LTC PLANNING?

(I am going to be making a few assumptions that are easily challenged.) Let’s assume the following:

• Annual state provided benefits is $36,000 increasing annually at a rate of 3.0% (in 15 years, that will grow to a pool of $56,431).
• Benefits are paid using a reimbursement model on a monthly basis (not daily) with a monthly cap of $3,000 (in 15 years, that would be $4,700.)
• Benefits are paid after a 90 day wait and qualifying criteria for benefits is consistent with HIPAA requirements of severe cognitive impairment or inability to perform 2 of 6 activities of daily living

Again, what does all this have to do with averages & planning?

Today’s national average cost for home care $4,842 per month.

Today’s national average cost for assisted living care is $4,782 per month.

Today’s national average cost for a private room in a nursing home is $8,662.

(For state-specific numbers, check out our cost of care interactive map.)

Do you see where I am going with this? Today’s cost of care exceeds those benefits that are being considered in state programs. Of course, the argument can be made that a little something is better than a whole lot of nothing. Which is true.

When you consider the number of people who opt for the default plan for long term care funding which is self-funding – it is better. But, there is a better way and it takes a little planning and reallocation of resources into an insurance strategy.

The most cited average for duration of care is 3.7 years for women and 2.2 years for men. And, according to the Alzheimer’s Association, the average duration for someone receiving memory carte is 8+ years.

So, you do the math and ask the question – are you average? Then ask the question, can your plan sustain and “average duration” long term care funding situation?

And, remember, we never know who will need care, for how long, and at what level.

Then, in your best Dirty Harry voice, ask “do you feel lucky?”

With that, I want to say thanks for taking time for me.

You can contact me at kevin.fisher@oneamerica.com or you can call me at (678) 512-9627.

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For questions about the OneAmerica Consumer Survey, LTC product solutions from OneAmerica, or would like help developing an active case, please contact my internal Justin Fox at (844) 658-3725 or via email at justinfox.isp@oneamerica.com