I have been writing on a most important topic that we all need to consider, ensuring that a good financial plan is intact and that all resources are being put to their best use. Before I talk more about the various ways to fund long term care, mentioned in my previous article, I want to share some statistics that aren't just statistics. I have also seen them play out in my financial planning practice over the last thirty years.
- The average American requires three years of care.
- The average annual cost for a private room in a facility in 2023 was $106,000. (Btw... I will want a private room!)
- The cost of healthcare increases at a higher inflation rate than other goods and services, partially due to the supply and demand of services as our population ages.
- The median cost of companionship type care is $33 per hour in the United States and about $29 per hour in Texas.
- There are around 8 million Americans using Medicaid to fund long term care needs, meaning they have mostly depleted personal assets and are relying on government assistance.
- In 2021, through Texas' Medicaid Estate Recovery Program (MERP), approximately $200 million in assets were seized from estates to reimburse the government for payments made by Medicaid. California seized around $1 billion in assets in the same year.
Keep in mind, the number of ways to mitigate this risk to a financial plan are increasing and some of them are quite a bit more attractive than the limited options offered when this first became an issue several decades ago.
I will start to explain more about the options in my next email.