Many people will likely need long-term care. Here’s what it means — and how you can help prepare for it financially.
What is long-term care? It is the range of services and support you may need to help meet your personal care needs resulting from a chronic illness or disability. Long-term care helps provide assistance with the basic tasks of everyday life like getting dressed, taking medicine, or making meals. These daily tasks are called Activities of Daily Living (ADLs).
Planning for long-term care is a serious issue: 65-year-olds today have almost a 70% chance of needing long-term care services and support in their remaining years. And women need care longer (3.7 years) than men (2.2 years).1
There are four considerations everyone should keep in mind as they develop a long-term care plan.
Get to know the different levels of care and their associated costs
Aging in place often refers to services being delivered to you in your home and can include aid rendered by visiting nurses, family, and friends. It can also mean living in a continuing care retirement community that has different facilities, each providing increasing levels of care. You move into the facility that matches the level of care you need and move to higher levels of care as you require them. The benefit of residing in such a community is that you “age in place” as you progress through the facilities that offer the level of care you need. It can be comforting to know that you will not need to seek a new care facility each time your care requirements change. You just progress through the stages within the same community.
An assisted living facility is often a residence that provides staff who can assist with daily needs such as showering, dressing, and taking medications. Moving into assisted living may also add a level of security knowing that you are not alone if a fall or a health event occurs.
Skilled care refers to a residential facility (or nursing home) that includes on-site medical care. These facilities often include short-term rehabilitation services following a hospital stay, as well as 24-hour nursing care for full-time residents who require extensive assistance and supervision. Memory care units may also be provided in these facilities for residents with cognitive challenges such as Alzheimer’s who require the most extreme level of supervision and care.
As you would expect, the associated costs for care increase with the complexity of the level of care.
Solidify your plan sooner, not later
You might not need long-term care services until later in life, but consider planning well in advance. You don’t want to be developing a plan to pay for these services after you already need them.
Discuss with loved ones how you want to be looked after
It’s important for you to communicate your wishes so that they can be understood and considered. Though you may assume your adult children are going to care for and support you if the need for long-term care arises, you should find out whether that is the case by speaking to them directly. Consider working together to create an action plan that supports your needs.
Consider how you’ll pay for long-term care
Health insurance and government programs, such as Medicaid and Medicare, impose restrictions and limits on paying for long-term care. That means you may need to incorporate other approaches into your plan such as liquidating assets, paying out of pocket, relying on a family member to pay, or purchasing long-term care insurance. Consider discussing all possible choices thoroughly with your legal and financial advisors.
1. “How Much Care Will You Need?” U.S. Department of Health and Human Services, accessed August 2023.
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Wells Fargo Advisors is not a legal or tax advisor.