Right now, COVID-19 has put Nursing homes and Assisted Living facilities in the national spotlight for just about the most horrific reasons imaginable. A highly comprised, elderly residency combined with 24-hour indoor exposure, became the ultimate Coronavirus nightmare.
The number of COVID-19 deaths in Long Term Care facilities has been, and continues to be, one of the sadder headlines of this pandemic. And as seems to be the case with just about everything COVID-19 related, the health care crisis of today will be the financial hardship of tomorrow.
In my 22 years as a financial advisor specializing on this topic, there have always been two “Truisms” about Long Term Care. I feel certain both will be accelerated in a post-COVID-19 world.
1. The Cost Of Care Is Extraordinarily High
And it’s going to get even higher! In the DC metro area alone the costs are significant:
- Assisted living facility costs between $7,000-8,000 a month
- Memory care for Dementia/Alzheimer’s runs anywhere between $8,000-12,000 a month
- Skilled nursing care can cost anywhere between $11,000-15,000 a month
- Home care is around $15,000-17,000 a month for around the clock care.
These are all pre COVID-19 numbers.
The future of LTC will be all about protection. How do you protect the residents from the rampant spread of future infections? Just as importantly, how do you protect the caregivers, who are certainly front line warriors in this difficult battle? Will caregivers’ salaries go up based on the new dangers that their job now entails?
All of these questions have answers that will cost our nation’s LTC providers a lot of extra money. To continue any profit model, that cost will be passed on to the consumer. It’s not unreasonable to assume that the average cost of care will be 50% higher in 2030 than it is today!
2. If You Are Going To Purchase LTC Insurance, The Best Time To Do It Is Now
My first LTC insurance seminar was in 1999. I have literally conducted over 700 seminars, workshops, lectures, etc. on this topic. When asked, “When is the best time to buy LTC insurance?” I always answer, “Now!”
Why? Because the price of LTC insurance is determined by your current age, your current health, the company you choose, and the design of that policy. On top of that, as we live into our 70s, 80s and 90s, more and more of us have been using our policies to help pay for these services.
As insurance company actuaries price in this risk, the general cost of LTC insurance for new buyers has gone up every single year I have been in this business. The actuarial risk presented by COVID-19 is in its infancy. Initial research has only just begun, but there are documented cases of chronic post hospitalization issues that have affected older COVID-19 survivors. These range from breathing problems to dementia scenarios.
Currently, if you have a diagnosis of COVID-19, you must wait 3 months after you have tested negative to be eligible to apply for LTC insurance. At that point, like any other ailment you may have, it will be a consideration that will ultimately determine the rate you will pay. If you fully recover with no visible lasting impairments, you probably won’t receive a big underwriting penalty.
But if you are experiencing any lingering or lasting effects from COVID-19, you may end up paying way more for your LTC policy, or being declined for coverage all together.
Obviously, if you have been thinking about looking into Long Term Care insurance, getting coverage before you get COVID-19 is the way to go. And remember, once you own your LTC policy, the price you pay cannot be raised on you by any physical or cognitive ailment that occurs after the date you paid for the policy.
Interested in Long Term Care Insurance? Contact me at email@example.com.