Planning for Long-Term Care

DANVERS, MA, June 22, 2021 – An average healthy 65-year-old couple living to their projected actuarial longevity has a 75% chance that one partner will require a significant level of long-term care (LTC), according to a new HealthView Services report. The data show a 25% probability that both will need LTC care in a skilled nursing facility, an assisted living facility, or require at least 44 hours per week of skilled at-home care.

The new report, “Long-Term Care & Financial Planning,” draws upon HealthView Services’ actuarial data to highlight the projected LTC costs, the probability care will be required and duration of care, as well as the significant impact of age, gender, health condition, and location on these expenses. It also reveals the cost of different types of care and the importance of the amount of assistance that may be required when budgeting for home health care at the end of life.

“COVID-19 has led to a new focus on long-term care and driven a shift toward home health care as a preferred option,” said Ron Mastrogiovanni, CEO of HealthView Services. “Although Americans may be more aware of long-term care as an issue, most choose to roll the dice when it comes to these expenses. Providing cost and probability of care data is a powerful starting point for LTC planning discussions between advisors and clients.”

The report shows a probability of 44% that an average 65-year-old male with no health conditions will need long-term care by his actuarial life expectancy of age 87. Assuming national average costs across all states and a blended average of different types of LTC, the report shows that he can anticipate spending $237,368 ($123,881 present value) for an expected 660 days of care. This excludes Medicare premiums and co-pays.

A healthy 65-year-old woman living to an actuarial life expectancy of age 89, has a 56% probability of needing long-term care. Her average duration of care will be 992 days and projected costs will be $373,712 ($183,841 present value) or 58% higher than her partner, given the longer period of care and higher annual costs driven by projected LTC inflation.

“LTC is a high-probability and high-cost event that needs to be planned for,” said Mastrogiovanni. “Couples, whether heterosexual or same-sex, need to develop a plan with a financial professional to ensure that if one partner requires LTC, the surviving spouse’s needs can also be met. For women, who tend to live longer than men and are on average 2.3 years younger than a male spouse, this is a particularly acute issue.”

The report shows the impact of chronic health conditions on LTC expectations for men and women, including: Type 2 diabetes, tobacco use, high cholesterol, and cardiovascular disease. With the exception of heart disease, the probability of needing long-term care is lower for both men and women with a chronic condition given reduced longevity. HealthView Services’ planning data reveals that when care is required by those with a chronic condition, on average it will be needed at an earlier age and for a longer period compared to a healthy individual.

For an average 50-year-old couple, costs will be significantly higher than for the 65-year-old couple, driven by an extra 15 years of annual LTC cost inflation. Assuming projected average longevity, an industry standard of 44 hours of home health care per week, one chronic health condition, and residency in San Francisco, California, a 50-year-old man can expect to spend an average of $368,421 ($128,755 present value) and his wife $486,520 ($166,309 present value) for long-term care.