Long Term Care Planning
Canadians face a real chance that at some point in their lives they may need to enter a long term care facility or receive special medical care in their home. This is expensive and will eat away at retirement savings. By planning beforehand with Long Term Care (LTC) Insurance, they can choose the type, location, and quality of the care they will receive.
LTC insurance either covers the direct costs of care, or offers monthly income to supplement the costs. The first method is a reimbursement plan, and the second is a benefit plan where the amount is fixed. The money in both plans is received as a tax-free benefit. If the insured passes away before LTC is needed, the premiums can be returned (if there is a Return of Premium rider) to the estate.
Consider these facts:
- Studies show that nearly half of today's population over age 65 will need some form of long term care (1). Here are some of the costs long-term care patients face today:
- Depending on their province, Canadians can spend up to $4,700 a month out of their own pocket for facility care that is subsidized by government programs.
- The cost of private, non-subsidized retirement homes range from $2,500 to $7,000 a month.
- Even if one chooses to remain at home when getting the care they need, they'll still need to pay for private nursing and for services such as shopping, cooking and cleaning. The average cost per hour for this is $14 to $19.
- According to Health Canada research, seniors (individuals age 65 and over) constitute the fastest growing population group in Canada. As the Baby Boomers age (born between 1946 and 1965), the seniors population is expected to reach 6.7 million in 2021 (2) .
- Almost half of Canadian workers have elder care responsibilities that impact on time and/or financial resources (3).
- Studies indicate a growing need for long term care insurance (4) :
- 42% of Canadians are concerned about having to care for their parents when they get older.
- Nearly half (47%) of Canadians are concerned about becoming a financial burden when they themselves get older.
Many people believe that the government plans will assist with the financial burden of long term care if the need arises however, with the Canadian health care system already over burdened, the system will not be able to accommodate or meet the demands of the aging population.
Planning for the risks of a long-term illness enables you to take control of the quality of health care you will receive in the future. Long-term care benefits allow you to maintain a sense of dignity and independence by providing the financial means to make decisions based on your choice of care, not availability.
(1) New England Journal of Medicine
(2) Health Canada, Canada's Aging Population report
(3) CARNET, 1998
(4) Ipsos-Reid, 2002