Morningstar’s ‘Must-Know’ Stats About Long-Term Care

According to research, 44% of men will need long-term care and 58% of women will need it

There’s little dispute that the need for long-term care is on the rise with an aging population, according to Christine Benz, Morningstar's director of personal finance.

In her latest commentary, Benz pulled together a number of statistics on long-term care from a variety of objective sources.

“The percentage of 65-year-olds who either spent at least one night in a nursing home or needed in-home healthcare over the previous two years jumped by 40% and 50%, respectively, between 2000 and 2010,” Benz wrote. “And the costs can be staggering—in expensive geographies, the annual outlay for care in a long-term care facility can exceed six figures.”

At the same time, Benz pointed out how long-term care insurance premiums have risen at a much higher rate than inflation. While prices on new long-term care policies weren’t uniformly higher in 2016 compared to 2015, the cost of a new policy has increased as much as 9% from one year to the next.

Culled from a number of sources, here are some of the statistics that Benz deems a “must-know.”

1. Who needs long-term care?

According to 2013 data from the Administraion for Community Living, 9% of adults over age 65 experience difficulty with self-care and 15% experience difficulty living independently.

The Center for Retirement Research at Boston College estimates 44% of men and 58% of women will need long-term care.

Alzheimer’s disease is one of the leading causes of needing long-term care. According to the Alzheimer’s Association, 11% of the population age 65 and older has Alzheimer's disease, which is about 5.4 million of Americans in 2016. The Alzheimer’s Association predicts 13.8 million Americans will have Alzheimer’s disease by 2050, barring the development of a medical breakthrough.

2. The duration of nursing home stays isn’t as long as you might think.

The average length of stay in a nursing home is less than a year for men and roughly 1.4 years for women, according to a report by the Center for Retirement Research at Boston College. The probability of needing more than one year in a nursing home for men is 22% and 36% for women, the same report finds. And the probability of needing more than five years in a nursing home is 2% for men and 7% for women.

3. Cost of care.

The median annual nursing-home cost in 2016 is $82,125 for a semi-private room and $92,378 for a private room, according to the Genworth Cost of Care Survey. The five-year annual inflation rate in nursing-home costs for a private room is a staggering 3.5%.

For adult day care five days a week, the median annual cost in 2016 is $17,680. For an assisted-living facility, the median annual cost in 2016 is $43,539, according to Genworth.

According a 2013 The Scan Foundation report, 22% of long-term care costs are paid out of pocket. 

Only 13.2% of people who receive professional home healthcare have long-term care insurance coverage, according to a 2010 Employee Benefit Research Institute report.

4. Long-term care impacts the caregivers, too.

According to the Family Caregiver Alliance, about 65% of older adults with long-term care needs rely exclusively on friends and family members to provide that assistance. The AARP estimates that the value of care delivered by unpaid caregivers is nearly $470 billion, according to 2015 data.

The Family Caregiver Alliance finds that 70% of caregivers have suffered work-related difficulties due to their caregiving duties. And, the Alzheimer’s Association estimates that the average amount of income that caregivers will lose due to time demands of providing care to those with Alzheimer's or other dementias is $15,000.

5. Who has bought long-term care insurance?

According to the Kaiser Family Foundation, the percentage of all long-term care delivered in the U.S. that is covered by long-term insurance is only 8%. The Center for Retirement Research also finds that 13% of single individuals over 65 have long-term care insurance.

According to the American Association for Long-Term Care Insurance, 17% of applicants ages 50-59 are denied long-term care coverage due to health issues, as are 45% of applicants ages 70-79.

6. Annual premiums decrease for men; increase for women.

According to 2016 data from the American Association for Long-Term Care Insurance, the annual premium for a “best-quality” long-term care policy for a married couple (both age 60) is $3,560. Meanwhile for a single man age 55, the annual premium for a “best-quality” long-term care policy is $2,035. For a single woman age 55, the annual premium is $2,580

According to the same data, initial premium amount for a “best-quality” long-term care policy for a single man fell 1.9% between 2015 and 2016. For a single woman age 55, the initial premium increased 7% over the same time period.

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