The Crisis in Long-Term Care Funding: Understanding Private Pay Alternatives

By Chris Orestis

Statistics show that the majority of people do not understand the various forms of long-term care (LTC), the different means to pay for it, and most do not plan for it. Adding to the growing funding crisis are the baby boomers who are now reaching Social Security and Medicare age—and 70 percent of them will need long-term care services. Over ten million Americans now require long-term care annually, and Medicaid is the primary source of coverage. With these numbers increasing every year, the United States has officially crossed the tipping point into the era of the “long-term care funding crisis.”

Diminished financial resources across the board have brought together a perfect storm of factors we must now confront. The simple fact is that more responsibility is going to be placed back on individuals and their families to find the resources necessary to handle the costs of long-term care. Understanding the growing array of alternative private pay solutions is a
critical part of LTC planning for advisors and providers.

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TIME: The Retirement Crisis Nobody Talks About: Long-term Care

By Penelope Wang

When you try to gauge the biggest risks to your financial security in retirement, health care costs usually top the list. But there’s even bigger danger that doesn’t get as much attention: long-term care costs.

By whatever measure you use, many Americans aren’t saving enough for retirement. In its latest annual retirement readiness study, the Employee Benefit Research Institute found that some 57% to 59% of Baby Boomer and Gen X households are on track to retire comfortably. But if you factor in long-term care costs, the percentage of households running short of money in retirement soars by 100% or more after 20 years for those in middle-class or upper-income quartiles, according to new study by EBRI. The analysis assumes that Baby Boomer and Gen X households will retire at 65 and spend average amounts for food, housing and other living expenses, in addition to long-term care costs.

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