Extra, extra, read all about RPEA and related news.
Extra, extra, read all about RPEA and related news.
Who will need it and for how long, how much it will cost, the state of the long-term care insurance marketplace, and the toll on caregivers.
Christine BenzAug 20, 2018
If there's a single unsolved problem in the retirement plans for many middle- and upper-middle-income adults, it's what to do about long-term care costs later in life.
Very high-income, high-net-worth people can plan to self-fund long-term care costs, though I'd advise them to do the math on long-term care cost inflation before getting too comfy with the idea that they'll have enough to do so. Meanwhile, people without significant financial assets will need to rely on Medicaid-provided long-term care. That's most people: Medicaid and other government programs cover the majority of the long-term care costs in the U.S.
Sandwiched in the middle are people with some, even significant, financial assets--just not necessarily enough to comfortably fund a $300,000 (or more) long-term care outlay at the end of their lives. For them, the choices are stark and rather unappealing. They could purchase traditional long-term care insurance and risk premium hikes. Alternatively, they could purchase one of the increasingly popular hybrid life/long-term care products and face an opportunity cost, as discussed here. Or they could forego insurance altogether, planning to self-fund care or use nonportfolio assets, such as a home sale, to cover any long-term care costs.
If you're among the people who are still on the fence about what to do, the best way to make smart decisions is to go into the process armed with the facts. How likely are you to need long-term care and for how long? What does long-term care cost, and what does it cost to insure against it?
In the latest installment of my now-annual compendium of long-term care statistics, I've pulled together current data to help you answer these questions and more. Each statistic includes a link through to the original source of the information; I've aimed to use statistics provided by objective parties, wherever possible. (The wealth of information on long-term care--as well as the often-heroic caregivers who provide it--are bright spots in an often dismal story.)
Usage of Long-Term Care
52%: Percentage of people turning age 65 who will need some type of long-term care services in their lifetimes.
47%: Estimated percentage of men 65 and older who will need long-term care during their lifetimes.
58%: Estimated percentage of women 65 and older who will need long-term care during their lifetimes.
2.5 years: Average number of years women will need long-term care.
1.5 years: Average number of years men will need long-term care.
14%: Percentage of people who will need long-term care for longer than five years.
10%: Percentage of Americans over age 65 who have Alzheimer's dementia.
33%: Percentage of Americans over age 85 who have Alzheimer's dementia.
64%: Percentage of Americans with Alzheimer's dementia who are women.
123%: Percentage increase in the number of people who died from Alzheimer's dementia, 2000-2015.
-11%: Percentage decrease in the number of people who died from heart disease, 2000-2015.
22%: Percentage of individuals over 65 in the highest income quintile who will have a long-term care need of two years or longer.
31%: Percentage of individuals over 65 in the lowest income quintile who will have a long-term care need of two years or longer.
45%: Percentage of people requiring significant long-term care help (assistance with two or more activities of daily living) who are under age 65.
8%: Percentage of people between the ages of 40 and 50 who will have a disability that will require long-term care services.
Paying for Care
$30 billion: Long-term care expenditures in the U.S., 2000.
$225 billion: Long-term care expenditures in the U.S., 2015.
57.5%: Percentage of individuals turning 65 between 2015 and 2019 who will spend less than $25,000 on long-term care during their lifetimes.
15.2%: Percentage of individuals turning 65 between 2015 and 2019 who will spend more than $250,000 on long-term care during their lifetimes.
$341,840: Estimated lifetime cost of care for someone with dementia.
$18,200: Median annual cost for adult day care (five days/week), 2017.
$45,000: Median annual cost for assisted-living facility, 2017.
$85,775: Median annual nursing-home cost, semiprivate room, 2017.
$97,455: Median annual nursing-home cost, private room, 2017.
$215,770: Average annual nursing-home cost, private room, Manhattan, 2017.
$51,100: Average annual nursing-home cost, private room, Monroe, Louisiana, 2017.
$23,394: Median annual income from all sources for individuals who are 65 or older.
$39,823: Median annual income for households headed by people 65 or older.
3.8%: Five-year annual inflation rate in nursing-home costs, private room, 2017.
5.5%: One-year annual inflation rate in nursing home costs, private room, 2017.
19%: Percentage of long-term care costs that were paid out of pocket, 2013.
8%: Percentage of long-term care costs that were paid by private insurance, 2013.
$263,200: Median household wealth for adults age 65 or older with no disabilities.
$94,200: Median household wealth for adults age 65 or older with limitations on two or more activities of daily living.
34.2 million: The number of Americans who have provided unpaid care to an adult 50 or over in the past 12 months.
16.1 million: The number of caregivers for someone with Alzheimer's or other dementia.
$470 billion: The estimated dollar value of long-term care provided by unpaid caregivers, 2013.
65%: The percentage of caregivers who are female.
33%: Approximate percentage of caregivers to people with Alzheimer's/other dementias who are daughters.
25%: Approximate percentage of caregivers who are "sandwich generation" caregivers, providing care to children as well as older adults.
34%: The percentage of caregivers who are age 65 or older.
33%: The percentage of people providing care to people age 65 or older who describe their own health as fair or poor.
83%: Percentage of care provided to older adults that is delivered by friends or family members.
65%: The percentage of older adults with long-term care needs who rely exclusively on friends and family members to provide that assistance.
34.7: Average number of hours worked by unpaid caregivers who have jobs in addition to caregiving.
70%: The percentage of caregivers who suffered work-related difficulties due to their caregiving duties.
36%: The average percentage of caregivers for people age 50 or older who said they were experiencing high levels of financial strain.
10%: The estimated percentage of older adults who have suffered from some form of elder abuse.
7%: The estimated percentage of elder-abuse cases that are reported to authorities.
State and Federal Funding
51%: Percentage of long-term care services and supports that were provided through Medicaid, 2013.
20%: Percentage of long-term care services and supports that were provided through other public sources, 2013.
62%: Percentage of nursing home residents whose care is provided by Medicaid.
20%: Percentage of Medicaid funding that went to pay long-term care costs in 2016.
50%: Expected increase in Medicaid spending for long-term care between 2016 and 2026.
$123,600: Maximum amount of assets that a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid, 2018. (Actual amounts vary by state.)
$3,090: Maximum amount of monthly income that a healthy spouse can receive for the other spouse to be eligible for long-term care benefits provided by Medicaid, 2018. (Actual amounts vary by state.)
100: Days of care in a skilled nursing facility ("rehab") covered in full or in part by Medicare following a qualifying hospital stay.
Long-Term Care Insurance
125: Number of insurers offering standalone long-term care policies, 2000.
Fewer than 15: Number of insurers offering standalone long-term care policies, 2014.
380,000: Number of individual long-term care insurance policies sold, 1990.
129,000: Number of individual long-term care insurance policies sold, 2014.
72,736: Number of hybrid life/long-term care policies sold to individuals, 2009.
305,068: Number of hybrid life/long-term care policies sold to individuals, 2013.
4.5 million: Number of individuals with long-term care insurance coverage, 2000.
7.25 million: Number of individuals with long-term care insurance coverage, 2014.
$1.98 trillion: Maximum potential benefit of all long-term care policies in force today.
$1.87 billion: Annual claims on long-term care insurance policies, 2000.
$9.2 billion: Annual claims on long-term care insurance policies, 2017.
$1,677: Average annual premium, long-term care policies being sold, 2000.
$2,772: Average annual premium, long-term care policies being sold, 2015.
99%: Percentage of new long-term care policies that cover both nursing home and in-home care.
0.5%: Percentage of all businesses offering long-term care insurance to their employees.
20%: Percentage of businesses with 10 or more employees offering long-term care insurance to their employees.
13.9%: Percentage of applicants ages 50-59 denied long-term care coverage due to health issues.
44.8%: Percentage of applicants ages 70-79 denied long-term care insurance due to health issues.
Could Your Long-Term Care Premiums Be Hiding in Plain Sight?
New Report on the Value of Public Pensions. As we know, defined benefit pensions not only provide a secure retirement for our members; they also contribute to economic vitality though the stable income that seniors spend in our communities. Just out this week, NCPERS released a research paper, 2020 Unintended Consequences, that shows that public funds helped power the U.S. economy, generating $179.4 billion more in state and local government tax revenues than plan sponsors contributed to their plans. This report built upon a 2018 report that documented state and national tax revenue generated by public pensions. This is a great update and complement to the often-cited Pensionomics 2018 report, released by NIRS, which found that retirees’ spending of pension benefits in 2016 generated $1.2 trillion in total economic output, supporting some 7.5 million jobs across the U.S.
Our Pensions Are Not the Problem. Not only are our pensions economic drivers, using progressive tax and revenue policy, states have tools to fund them. To highlight the connection between tax policy and pension funding, Good Jobs First released the second installment of its 13-state report, "Putting State Pension Costs in Context." This report found that Colorado, Georgia, Louisiana, Missouri, South Carolina, Texas, and Vermont together spend more than $17 billion per year in corporate development subsidies and tax breaks, which is about five times those states' yearly pension obligations. The first report, released in January 2020, looked at Arizona, Connecticut, Kansas, Kentucky, Oklahoma, and Wyoming and found that huge tax breaks and other subsidies to corporations also exceeded pension obligations in those states.
A Pension Defense Toolkit. With concerns about pension defense on the rise, we want to share the Public Pension Defense Toolkit from NCPERS, attached, which includes legislative action checklists, state case studies and guidance for media work. Another helpful resource is a 2019 NIRS report, showing that shifting new employees from defined benefit pensions to defined contribution or cash balance plans actually resulted in increased taxpayer costs without any major improvements in funding. The report, Enduring Challenges: Examining the Experiences of States that Closed Pension Plans, draws from case studies in four states that closed their pension plans in favor of alternative plan designs: Alaska, Kentucky, Michigan, and West Virginia.
Additionally, the National Public Pension Coalition, which supports state level pension defense coalitions, has a wealth of pro-pension resources at the ready for states, including videos on pensions and pension opponents, and pension one-pagers and reports.
General Assembly postponed until March 29, 2021 – more news on this will follow in the coming weeks.
Al Darby, President
“Assemblyman Jim Cooper is carrying two RPEA sponsored bills in the legislature for RPEA. AB2378 would allow CalPERS to add to the existing death benefit an annual increase based on the California Urban Consumer Price Index (CPI). AB3359 would allow the California Urban Consumer Price Index to be used in calculating the annual Cost-0f-Living-Allowance (COLA) most of us see every May - this is a better measure of CPI in California. We will keep you apprised of the progress of these bills. We hope to interject two other matters into the legislative process this year as well. Great thanks to our Legislative Committee and Aaron Read and Pat Moran, our lobbyists, and especially Assemblyman Jim Cooper.”
“Assemblyman Jim Cooper is carrying two RPEA sponsored bills in the legislature for RPEA. One raises the CalPERS Death Benefit to $5,000 and the other one calls for the ‘CA Index’ to be the Cost Of Living Allowance (COLA) determiner. We will keep you apprised of the progress of these bills. We hope to interject two other matters into the legislative process this year as well. Great thanks to our Legislative Committee and Aaron Read and Pat Moran, our lobbyists, and especially Assemblyman Jim Cooper.”
"China investments by CalPERS have been in the news lately and it is suggested that this is somehow supporting Chinese military objectives and this is not in the best interest of the U.S. The truth is that CalPERS investments in China have actually been declining in recent years and now stands at 1% of its stock portfolio or about $2 billion. These claims in certain news outlets that CalPERS is contributing to Chinese theft of U.S. intellectual property are probably largely inaccurate. U.S. companies with factories in China are more likely to be inadvertently giving up more intellectual property than CalPERS ever could through its stock holdings in China. Most pension funds around the country are invested in China along with CalPERS."