What Are the Issues Regarding Long Term Care and Long Term Care Insurance?

Q: Having lived and worked in NJ for over 30 years, my husband and I have built a healthy retirement nest egg. Our concern is one or both of us will ultimately need long-term care that will wipe out our savings. What are the issues regarding long-term care in New Jersey?  

The Problem – Cost of long-term health care. About half the population who will reach the age of 65 are expected to enter a nursing home at least once in their lifetime. A 55 year-old New Jersey resident is expected to pay over $300,000 for one year of nursing home care when they are likely to need it at the age of 80. Based on the average nursing home stay, total costs are expected to reach $1.3 million per person – easily wiping out a lifetime of savings for many families. New Jersey’s long-term care costs are among the highest in the country.  

The Solution – Long Term Care Insurance. Just a quick background on long-term care (LTC) and long term care insurance. Let’s start with what conditions would fall into the category of LTC: a prolonged physical illness, a disability, or a cognitive impairment (such as Alzheimer’s disease). The need for LTC is generally driven by the inability to perform one or more of the six activities of daily living (ADLs): 

  1. bathing
  2. continence
  3. dressing
  4. eating
  5. toileting
  6. transferring (getting out of bed)

LTC insurance is designed to cover the expenses of long-term care.  Before we dig into LTC insurance policies, let’s dispel two common myths about publicly provided LTC.  

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