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The Basics of Long-Term Care

By Tsuneko Nakatani
New York Life Insurance Company and New York Life Insurance and Annuity Corporation

Aging is a fact of life and it comes with certain realities. While most of us probably don’t want to picture ourselves eventually needing help with daily activities, more than half of Americans turning 65 today will need some type of long-term care during their remaining years1. As this type of care is not generally covered by private health insurance or Medicare, it’s important to create a plan to help protect yourself and your family from the financial and emotional impact of a possible long-term care event.

What is long-term care?

Long-term care encompasses a variety of services that assist those who can no longer perform everyday activities on their own. These activities, known as activities of daily living (ADLs), include dressing, eating, and bathing. A chronic illness or a physical impairment can lead to a need for long-term care, but it’s most commonly needed as the result of a cognitive issue, such as Alzheimer’s disease. Care services can be provided in the home, a community setting, or a facility such as a nursing home.

How much does long-term care cost?

On average, women need about 2.5 years of long-term care and men an average of 1.5 years2. The national average for a home health aide is $23.27 per hour (so for example, 20 hours of care per week would cost more than $24,000 per year), while a private room in a nursing home averages $103,660 per year3

Long-term care costs can quickly add up and can have a significant impact on your retirement and the assets you’ve worked so hard to accumulate. Understanding the various long-term care planning options available is critical to helping you put a plan in place to ensure you have access to the type of care you prefer while protecting your finances.

How to plan for long-term care

Depending on your age, health, means and needs, there are several ways to address long-term care.

Long-term care planning options:

Standalone or traditional long-term care insurance plans generally provide the most robust long-term care coverage based on the premiums paid, can be customized to suit your needs, and offer the option to receive care at home, in an assisted living facility, or a nursing home.

Linked-benefit or hybrid plans combine long-term care insurance with life insurance, providing broader coverage and greater flexibility usually at a slightly higher price point since you are insuring multiple risks.

Riders, such as chronic care riders on life policies, offer the most basic coverage, allowing a portion of the policy’s death benefit to be accessible should you become chronically ill.

You may be able to pay for long-term care out-of-pocket (self-fund) if you have significant assets. While this may be an option for some, it’s often valuable to weigh the benefits of private insurance versus self- funding as there are additional advantages that come with private insurance including care management and risk sharing, which can benefit you in the event of a catastrophic long-term care event.

Medicaid does cover some long-term care services (unlike Medicare, which most people are surprised to learn does not cover long-term care) but you need to spend down most of your assets to qualify and you need to receive care in an approved facility.

When to start planning for long-term care

Health and age are key factors used in determining eligibility and rates for private long-term care solutions, so it’s best to explore these options when you are in your 40s and 50s.

It’s never too soon to start planning for long-term care. The peace of mind you’ll have knowing you’re protecting your family and retirement can be an important benefit of creating a plan, even if you elect to just protect part of your risk with a smaller amount of coverage. Take the first step and contact a New York Life agent to help you find a solution that best suits your needs.

1.Melissa Favreault and Judith Dey, “Long-term services and supports for older Americans: Risks and financing research brief,” Office of the Assistant Secretary for Planning and Evaluation: U.S. Department of Health and Human Services, February 2016


3.“Long-term care costs by state and region,” New York Life Insurance Company, 2018

This educational, third-party article is provided as a courtesy by TSUNEKO NAKATANI, CPA, MBA, Agent, CA Insurance Lic. #0I69621, AR Insurance Lic. #17143316) New York Life Insurance Company. To learn more about the information or topics discussed, please contact Tsuneko Nakatani at tnakatani@ft.newyorklife.com, 10885 NE 4th St. Ste 1400, Bellevue, WA 98004.

The purpose of this material is solicitation of individual insurance. An insurance agent may contact you. Policy forms ICC16-316-60P & ICC16-316-284R, ICC16-316-150P & ICC16-316-283R, 316-60P & 316-284R, 316-150P & 316-283R & ICC13314-60, 314-60, 898-60, and any state-specific, are issued by New York Life Insurance and Annuity Corporation, Newark, DE, a wholly owned subsidiary of New York Life Insurance Company. Policy forms ICC18-LTCD PLCY (0218), ICC18-LTCDNC PLCY (0218), ICC18-LTCDNC-U PLCY (0218), ICC18-LTCD-U PLCY (0218), ICC18-LTCWP PLCY (0218), ICC18-LTCWPNC PLCY (0218), ICC18-LTCWPNC-U PLCY (0218), ICC18-LTCWP-U PLCY (0218), LTCD PLCY (0218), LTCD-U PLCY (0218), LTCWP (0218), ICC14-LTC6, LTC6, LTC6-U, and any state-specific, are issued by New York Life Insurance Company, New York, NY. These products have exclusions and limitations. Underwriting approval is required to purchase coverage and a medical exam may be required. The company reserves the right to increase premiums in the future. For cost and complete details of the coverage, contact your agent or the company.

ICC19-1830455 and 1830455

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With experience in commercial banking, financial management, and as a CPA, Tsuneko Nakatani is passionate about advising individuals and businesses with financial planning, income protection, and wealth accumulation/distribution. She serves as a Financial Services Professional* for New York Life from 2012. She currently specializes in long-term care and retirement/estate planning.