No one likes to think about the possibility of their own disability or the disability of a loved one. However, as the statistics below demonstrate, we should all plan for at least a temporary disability. This article examines the eye-opening statistics surrounding disability and some of the common disability planning options. Disability planning is one area where we can give each and every person and family we work with great comfort in knowing that if they or a loved one becomes disabled, they will be prepared.
Most Individuals Will Face At Least a Temporary Disability
Studies show most people will face at least a temporary disability sometime during their lifetime. Specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, according to the definitive study in this area, depending upon their ages, up to 44% of Americans will face a disability of up to 4.7 years (according to the American Academy of Actuaries). Overall, Americans are up to 3.5 times more likely to become disabled than die in any given year. According to the Social Security Administration, more than 2.5 million disabled workers in their 20s, 30s, and 40s receive SSDI (i.e., disability) benefits.
Will Face a Long-Term Disability
According to a survey conducted by the Centers for Disease Control’s National Center for Health Statistics, over 1.46 million Americans receive long-term home health care services at any given time. Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one “activity of daily living” (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer’s disease).
The Department of Health and Human Services also estimates that by next year, 12 million people will need long-term care. The department also estimates that 70% of all persons age 65 or older will need some type of long-term care services during their lifetime.
The Alzheimer’s Factor
Alzheimer’s is growing at an alarming rate. This year’s Alzheimer’s Association annual report titled “Alzheimer’s Disease Facts and Figures” explores different types of dementia, causes, and risk factors, and the cost involved in providing health care, among other areas. Here are a couple of discomforting statistics in this report:
An estimated 5.8 million Americans of all ages have Alzheimer’s disease.
15-20% of people age 65 and older have Alzheimer’s disease.
Caregivers are at risk
of developing health problems.
According to the report, millions of unpaid caregivers (family members and friends) are providing care to persons with Alzheimer’s or dementia, and the numbers are steadily increasing. Those caregivers are at high risk of developing health problems or worsening existing health issues.
Spouses who are caregivers for the other spouse with Alzheimer’s or other dementia are at greater risk for emergency room visits due to their health deteriorating as the result of providing care.
Long-Term-Care Costs Can Be Staggering
Not only will many individuals and families face prolonged long-term care, in-home care and nursing home costs continue to rise. In New York State, the average cost of long-term care is $148,190 per year and continues to increase.
Underestimate the Risk
Perhaps most importantly, despite overwhelming and compelling statistics, most Americans grossly underestimate the risk of disability to themselves and to their loved ones. According to the Council on Disability Awareness 2010 survey:
64% of wage earners believe they have a 2% or less chance of being disabled for 3 months or more during their working career; the actual odds for a worker entering the workforce today are closer to 25%.
Most working Americans estimate that their own chances of experiencing a long-term disability are substantially lower than the average worker’s.
Given the high costs of care, this underestimation often leaves Americans ill prepared to pay for the costs of long-term care.
May Cover These Costs
If a parent, their spouse, or family member needs long-term care, the cost could easily deplete and/or extinguish the family’s hard-earned assets. Alternatively, seniors (or their families) can pay for long term care completely or in part through long-term-care insurance.
Unfortunately, many older Americans will either be medically ineligible for long-term-care insurance or unable to afford the premiums. In that event, more aggressive planning should be considered as early as possible to make sure life savings are not depleted as a result of having to pay out-of-pocket for care. With the help of an elder-law attorney, a plan can be created that will protect much of the assets of an individual or couple that would otherwise be at risk of being depleted.
Should Thoroughly Address Disability
When a person becomes disabled, he or she is often unable to make personal and/or financial decisions. If the disabled person cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian over the person or property, or both.
At a minimum, seniors need broad powers of attorney that will allow agents to handle all of their property upon disability, as well as the appointment of a decision-maker for health-care decisions (the name of the legal document varies by state, but all accomplish the same thing). Alternatively, a fully funded revocable trust can ensure that the senior’s person and property will be cared for as desired, pursuant to the highest duty under the law – that of a trustee.
The above discussion outlines the minimum planning everyone, including seniors and their loved ones, should consider in preparation for a possible disability. It is imperative that families work with a team of professional advisors (legal, medical, and financial) to ensure that, in light of their unique goals and objectives, their planning addresses all aspects of a potential disability.