The
Specter of Long-Term Care
By David Braze (Motley Fool
A
little more than 10 years ago, my mother, then aged 84 and living
alone, took a tumble down the stairs of her home. Unfortunately,
she failed to recover from that fall and was no longer able to care
for herself. She required comprehensive personal services that had
to be provided by someone else. Thus began my sudden and scary introduction
to the murky world of long-term care. Unwilling to relocate to my
home, Mom elected to move to a local nursing home where she died
not quite three years later. Had she lived, she could have afforded
just one more year of that stay before her assets would have been
totally exhausted.
A
few years later, my 90-year-old father took a fall that broke his
hip -- an injury from which he, too, could not recover. Worse, he
was already providing care to my invalid stepmother. Neither was
willing to relocate, whether to my home or to a nursing home. They
elected to hire live-in caregivers. My stepmother died about one
year later, and my father a year after her passing. In the interim,
Dad had suffered two mini-strokes that rendered him unable to speak
and further contributed to his immobility. While he spent some $200,000
for the long-term care he and my stepmom received in their home,
at death he still had sufficient assets for another eight years
of those services.
Scary
numbers
Long-term care. They're just three little words -- easy to say,
yet filled with grave import. The words usually evoke images of
nursing home care, a concept that strikes fear in the hearts of
the elderly. Many consider the very idea of long-term care to be
synonymous with the rapid depletion of one's life savings and ultimate
impoverishment. Who can blame those who think that way? We've all
seen the published statistics from the various groups interested
in the topic, and the data just seem to get worse every time we
see them. Consider this brief sampling I've seen in print from time
to time:
"Six
out of 10 Americans who reach age 65 will need long-term care..."
(Federal Long-Term Care Insurance Program)
"Over the next three decades, the U.S. population age 65 and
older is expected to double, to 70 million, comprising 20% of the
population by 2030." (Insurance Marketplace Standards Association)
"The average length of stay in a nursing home is 2.4 years..."
(Chicago Tribune)
"The number of persons in nursing homes is expected to increase
by over 60% in the next 30 years." (National Long-Term Care
Brokers)
"On average, U.S. nursing homes now charge $54,900 a year,
and this could reach as high as $190,000 by 2030, when the last
of the boomers reach age 65." (MetLife Market Survey of Nursing
Home and Home Care Costs, September 2005)
Scary? You bet! And when a loved one requires long-term care, it
can be heartbreaking. So just how should we incorporate the prospect
of long-term care into our planning? To answer that question, we
must review some of the facets of long-term care so we can gain
a better understanding of how best to approach the problem in our
planning.
First,
we'll define long-term care. Then, in later articles, we'll examine
how and by whom the costs of such care are covered. And along the
way, we'll examine some of the upsetting statistics cited above
to assess how we might reasonably weigh the odds for our own long-term
care needs. Onward, then, to some necessary definitions.
How
are your ADLs?
Typically, long-term care is defined as medical, nursing, or custodial
care designed to help people who have disabilities or chronic care
needs. This care may be short- or long-term and may be provided
in a person's home, in the community, or in nursing homes or assisted
living facilities. Long-term care ranges from assistance in caring
for personal needs to comprehensive medical support. In general,
long-term care is viewed as the need for help in performing one
or more of what's called the Activities of Daily Living (ADL) and,
to a lesser degree, what's called the Instrumental Activities of
Daily Living (IADL). The National Center for Health Statistics,
along with most insurance companies, defines ADLs as bathing, dressing,
eating, getting in or out of a bed or chair (transferring), and
using the toilet. IADLs include activities essential to leading
an independent life such as managing money, doing heavy or light
housework, taking medications, shopping, preparing meals, and using
the telephone.
Using a broad view of long-term care, a report titled "Mid-Life
and Older Americans With Disabilities" published by the American
Association of Retired Persons (AARP) states that in 1994 some 9.5
million Americans aged 50 or older received help for one or more
ADLs and/or IADLs. Of those, 1.6 million received help for two or
more of the five ADLs. In a May 2003 fact sheet, the Georgetown
University Long-Term Care Financing Project reported that in 2000,
some 6 million persons age 65 or older needed help with ADLs and/or
IADLs.
When
I view the list of ADLs and IADLs in retrospect, I see my mother
had problems in at least four areas even before she had her fall.
My father and stepmother had combined problems as a couple in at
least five of those areas. And, as our population of elderly rises,
these problems may be encountered by far more folks than they are
now.
Sadly,
there is no easy solution to resolving these issues or paying for
their costs. Increasing life spans do not equate to physically healthy
lives. Therefore, some outside assistance may be needed, and that
aid could be costly in the absence of a loving and willing family
nearby. Our national health system seems ill-equipped to provide
affordable long-term care programs, and the insurance industry has
really just begun to develop effective policy coverage to shoulder
part of the costs involved.
How,
then, should we plan for long-term care? Our next article in this
series will start to answer that question and discuss how Medicare
and Medicaid fit into the long-term picture.
Dave
Braze is a retired financial planner who answers questions on the
Rule Your Retirement Q&A discussion board. The Motley Fool is
investors writing for investors.
For
more information, visit the Motley
Fool Website
