4 Things to Know about Long-Term Care and Finances after 50

By Eric Tyson, Bob Carlson

Copyright © 2016 Eric Tyson and Bob Carlson. All rights reserved.

Long-term care (LTC) generally refers to any assistance you may need with your day-to-day living. When planning your finances after 50, you may need to consider your options. The forms of long-term care — independent living, home care, assisted living, and nursing home —depend on the level of assistance you need. As you consider LTC when you’re putting together your retirement plan, it may help to have some background information:

  • The concept of long-term care (LTC) is relatively new and still evolving. The first nursing homes in the United States probably were formed in the 1950s. Nursing home care and LTC used to be interchangeable. Later in the 1980s, assisted living facilities took root in the U.S.; home care became more structured about the same time.

  • Long-term care insurance (LTCI) didn’t become a mainstream consumer product until the 1980s. LTCI policies have been around only a few decades. The early policies earned a bad reputation because limited definitions of coverage, a high percentage of declined policyholder claims, and substantial premium increases turned off consumers. As a result, a small percentage of those age 50 and older own LTCI. Things improved for a period. Policy terms generally were standardized. There was less confusion about covered care and few significant premium increases — at least among insurers that had been offering the policies for years.

  • The most widely used definition of long-term care focuses on the activities of daily living (ADL). The ADL are dressing, bathing, eating, walking, and using the bathroom. A widely-used standard states that a person needs LTC when they require assistance with two or more of the ADL.

  • LTC isn’t restricted to medical care. It usually is a combination of medical care and personal assistance. LTC can range from cooking, cleaning, and dressing to physical therapy, skilled nursing care, and administering medication.

    The phrase “long-term care” can be misleading, because a person could need help with ADL for a relatively brief period while recovering from an injury, illness, or surgery.