How Will the Aging Middle Class Afford Long Term Care?

As we age, simple things we took for granted as kids become more difficult — and more expensive. That’s a truth all of us know. What you may not realize is that the aging middle class will face unique difficulties going forward. The private market offers options for assisted living, but at a price too high for the middle class; and those same people often have too much to qualify for Medicaid or subsidized housing. See Health Affairs article on the same.

Moreover, the adults stuck in this bind have fewer assets to fill the gap. They have more debt and less savings, are less likely to receive pensions, and likely have smaller families to turn to for support as they age.

What will fill the gap in the coming decade as more and more seniors require, but cannot afford, long-term care? 

The government could seek to incentivize the private market by expanding tax credits to developers of low-income senior housing, as a New York Times article suggests. The United States, like many Western democracies, could turn to public programs to fund long-term care, or shift the boundaries of Medicaid to cover seniors above the current cut-off line, or to cover costs like housing instead of just health care. Given the increasing pressure on Medicaid and the difficulty of accruing political capital for such hot-button issues, those expansions seem unlikely. Will the private market respond to demand, and start offering lower-cost options on its own?

Long-term care insurance (LTCI) may be an avenue for growth, as discussed in this Commonwealth Fund article. Private LTCI options have become increasingly popular since their emergence in the 1970s, and despite some flaws, from underwriting and actuarial uncertainties to inflexible designs, LTCIs are overall a sound investment.

Planning for the possibility of needing long term care in the future is something we can assist with. We can also provide guidance in how that care will be paid for, without sacrificing all of your savings. If you are interested in discussing an asset protection plan that focuses on long term care, contact our Guntersville office at 256-486-3407.