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How Much Will You Pay for Long-Term Care if You Don't Have Insurance?

Long-term care is something that every retiree likely thinks about at some point, but it can be a difficult consideration to navigate. Long-term care insurance is usually recommended but can cost a lot of money. However, long-term care without insurance coverage is even more expensive.

Although the need for long-term care is not necessarily guaranteed, many retirees feel more secure knowing they are covered in the event of an accident or sudden change in health. If you’re considering opting against long-term care insurance, it’s very important to be aware of the potential costs associated with out-of-pocket long-term care.

The real costs of long-term care

The average person will not need long-term care for very long at all. In fact, many people require long-term care services for two years or less before they can return to living a normal life unassisted. However, costs can certainly rack up over the course of two years, especially if you are uninsured.

There are many different types of long-term care, including nursing homes, home health agencies, assisted living facilities, adult day healthcare services, hospice care, home health aide services and more. Based on a 2018 Genworth study, the annual median costs of U.S. long-term care services vary depend on the type of care, but all have the potential to be extremely expensive.

  • Nursing home care: The median cost for a private room is around $8,365, or $100,375 annually. A semi-private room is only marginally cheaper, at around $89,297 per year.

  • Assisted living: The median cost of housing in an assisted living facility was around $4,000 monthly, or $48,000 per year.

  • Adult day healthcare: Adult day care services cost around $1,560 per month, or $18,720 annually.

  • Home health aide: The median cost of a home health aide was $4,195 monthly, or $50,336 annually.

All of these costs will differ slightly depending on where you live. For example, in the Los Angeles area, costs were higher than the U.S. medians listed above.

As you can see, if you end up needing long-term healthcare services, particularly for more than a year or two, the out-of-pocket costs could be astronomical. Some costs may be covered by Medicaid if you deplete all of your assets, but you don’t ever want to get to this point.

On the flip side, many long-term care policies cover one to five years, depending on the plan, and can cost thousands of dollars per year. You can save yourself on premium costs by enrolling when you are younger, but long-term care insurance still does not come cheap.

If you opt against long-term care insurance, you may be able to “self-insure” and save up the money to potentially pay for long-term care costs later. Should you not need these funds, you’ll have more to pass on to your heirs. However, saving for these kinds of expenses is not always easy.

Weigh your options and make informed decisions

When it comes to long-term health insurance, many soon-to-be-retirees aren’t sure where to turn. The type of coverage, how much coverage to get and how early to buy it are all things that need to be considered if you are interested in purchasing insurance. Regardless of what you choose, long-term care is an important consideration when planning for retirement.

This is why it’s so important to speak with a certified financial planner about your financial circumstances prior to retirement. Your advisor can help you analyze your finances and budgets early-on, so you know how much you can afford when it comes to insurance coverage. Or, if you opt to not get insured, your financial planner and you can discuss potential financial risks should you need care in the future or how to save to protect yourself down the road.


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