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The Specter of Long-Term Care

This article is the first of a six-part series on long-term care.

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 theRule Your RetirementQ&A discussion board. The Motley Fool isinvestors writing for investors.


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