Long-Term Care Insurance

What is Long Term Care Insurance?

As we age, the likelihood we will need some type of medical or personal care increases.  We may need long term care – a variety of services which help meet the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods of time.  Such services typically include assistance with normal daily tasks like dressing, bathing, and using the bathroom. Long-term care can be provided at home, in the community, in assisted living facilities or in nursing homes.

On average the need for long term care services lasts months or years, not weeks or months, and can be very expensive.  The costs of long term care on average exceed $50,000 per year (www.longtermcare.gov) and generally speaking, Medicare, Medicare supplement insurance and basic medical insurance plans do not cover the cost.

Long term care insurance was developed for precisely this reason – to provide the needed financial protection against the cost of long term care that other plans simply don’t cover. If you need long-term care services, what financial resources could you call on? Do you have the necessary savings to pay for home health care for six months, a year or longer without the expense being a burden on your lifestyle?

If not, long-term care insurance may be a good option for you to explore.

An insurance policy, based on your need for care, will pay a daily or monthly benefit amount to cover some or all of your long term care costs.  Some policies will pay benefits for up to a stated period of time such as three or four years while others pay until a maximum dollar amount has been paid, such as $150,000.  Most policies have options for your daily or monthly and policy maximum benefits to automatically increase every year so that your coverage keeps pace with rising health care costs.

It’s never too early to consider long-term care insurance because:

• The younger you are when you buy long term care insurance the less it cost.
• Once you have the coverage, it is Guaranteed Renewable for life – it cannot be cancelled. Conversely, once you become too unhealthy to obtain it, you are unlikely to ever be healthy enough to qualify again.

If you are 45 or older and do not have coverage in place, I encourage you to learn more now. For more information including a personalized quote, please contact me.

How Much Long Term Care Insurance is Enough?

When it comes to insurance there isn’t a one-size fits all approach.  This is especially true when it comes to long-term care insurance.

When thinking about your long-term care insurance policy, it is important to take the following into consideration

Protecting Your Assets

Long term care insurance should be a factor in your overall retirement planning. Because needs, resources and personal situations differ, it’s important to discuss your situation with a trusted advisor.

Current Long Term Care Costs

Whether you plan to move to a warmer climate or closer to your family, the cost of care varies by state and by region. Where you retire is an important factor in determining the amount of coverage you will need.

Here are some national average costs for long-term care in the United States (in 2023).

• $285 a day or $8,669 per month for a semi-private room in a nursing home
• $320 a day or $9,733 per month for a private room in a nursing home
• $176 a day or $5,350 per month for care in an assisted living facility (for a one-bedroom unit)
• $33.00 an hour for a health aide
• $30.00 an hour for homemaker services

Remember, the cost of long-term care depends on the type and duration of care you need, the provider you use, and where you live.

How Much Care Will You Need

The duration and level of long-term care will vary from person to person and often change over time. Here are some statistics to take into account:

• Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years.
• Women need care longer (3.7 years) than men (2.2 years).
• One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years.

As you can see there are many issues surrounding buying long term care insurance.  I know you have questions so give me a call and let’s sort them out.

NOW is the Time for Long Term Planning

We won’t admit it but NOW is the time to start planning for our long term care needs.  Planning ahead is important because 70% of people turning age 65 can expect to use some form of long-term care during their lives.  And, most likely the older you get the greater the chance you will need long term care.

Why is planning ahead for long term care so important? Consider the following:

• not relying on children or family with care giving responsibilities
• protecting your retirement assets 
• ensuring that critical choices remain yours

It’s important to plan ahead because the cost of services often exceeds what you can afford to pay from your income and other investments. With planning, there is a greater likelihood that you will be able to leave an estate to your heirs, because you are less likely to use up your nest egg. 

With long term care planning you are helping to reduce the emotional and financial stress on you and your family. It gives you and your family peace of mind.

Most important, you want to stay in your home.

If you will need care, planning will help ensure your greater independence should you need care. Your choices for receiving care outside of a nursing facility and being able to stay at home or receive community-based services are greater if you plan ahead.

Don’t Delay!

There are a number of reasons many people don’t plan ahead.  Maybe you think, that even as you age, you won’t be dependent on others or need assistance. Or, maybe you think you have time to buy long term care insurance. Keep in mind, the older you get the more expensive long term care insurance becomes.  

Whatever your reason, give me a call and let’s discuss your options.

Fact vs Fiction About Long Term Care Insurance

Fiction: I am probably already covered for long term care.
Fact: Most people think that their insurance covers long term care expenses. That is not so. Long term care is NOT covered by other kinds of insurance, including your HMO, health or long term disability insurance. Only long term care insurance that you typically purchase on your own covers day-to-day personal care assistance when you are unable to perform everyday activities like bathing and dressing.

Fiction: Medicare or Medicaid will cover my long term care.
Fact: Medicare does not generally cover long term care. Medicare pays for skilled care in a nursing home only for short periods (only up to 100 days) during which you are recuperating following a hospital stay for a related condition. If you need personal or custodial care, Medicare will not pay these costs. Medicare will only pay for care at home under very limited circumstances. Medicaid pays for long term care only for people with very low assets and limited income.

Fiction: Long term care is only for the elderly.
Fact: While the majority of people who require long term care are elderly, younger people can require it at any time due to unexpected illnesses, diseases, injuries or accidents.

Fiction: I won’t need long term care insurance because my family will be able to care for me.
Fact: Families do and will continue to provide care, but what if you need professional help or a stay in a nursing home or assisted living facility? Plus, caring for a family member can be a huge financial and emotional burden. And, the fact that family and friends may help supplement care does not have any bearing on the cost of coverage.

Fiction: I can’t afford long term care insurance.
Fact: Long term care insurance is more affordable than you might think and can be tailored to meet your needs and your budget. The costs of long term care insurance can be managed by creating a retirement plan or a financial plan that is right for you. Also, the younger you are when you purchase long term care insurance, the lower the premiums.

Check out more facts about long term care or give us a call to discuss your questions.

Hybrid Long Term Care Insurance vs Traditional Long Term Care Insurance

Did you know that is more than one option when it comes to long term care insurance?

With the traditional long term care insurance you pay your premium, and if you need long-term care due to age or illness, the policy pays out a daily or monthly benefit. Some people think that if they die without needing long-term care, they feel they’ve “wasted” the premiums.

Hybrid Long Term Care Insurance

With a hybrid plan you can withdraw funds from the policy for long-term care, and the insurance company pays for care when those funds run out. And, if die without having needed expensive long-term care, your heirs receive a death benefit.

Another consideration is that the benefits are guaranteed. If you pay your premiums (usually for 10 years or less), you will have a contractually guaranteed death benefit, guaranteed cash value and a guaranteed amount of long-term care coverage.

Although hybrid policies provide you the ability to elect your long term care insurance benefits at the outset, monthly benefit, benefit period, and inflation protection they are not as flexible as traditional plans.

Some hybrid linked benefit insurance policies are funded with a one-time single premium up-front such as $50,000 or $100,000. Others are paid over short periods of time, which can make them very costly.

Plus, the premiums you pay for hybrid policies are not potentially tax-deductible, because hybrid policies are not considered tax-qualified policies.

Traditional Long Term Care Insurance

With a traditional stand-alone policy, which can be custom-tailored to suit your needs, you elect your benefits at the start

• Monthly Benefit
• Benefit Period (2 years, 3 years, 4 years, 5 years, 6 years, Unlimited) (Individual or Shared)
• Inflation Protection
• Waiting Period (30 Days – 180 days)

Your premium is guaranteed renewable.  Premiums are typically paid on a monthly, quarterly, semi-annual or annual basis. As long as you pay your premium, you will have coverage in-force.

Most importantly because traditional policies are able to be customized.  You are able to design the policies to account not only for your current needs but also to account for future inflation.

Give us a call and let’s discuss if it’s worth it for you to consider a hybrid insurance policy or if a traditional long term insurance policy makes more sense.

Taking the Confusion Out of Linked Benefits

Q: What are Linked Benefits?
A: A Linked Benefits policy is a unique life insurance or annuity policy that allows you to protect your assets from a potential long term care (LTC) event and still leave a legacy to your loved ones without having to purchase two separate policies.

By paying an initial lump sum premium, you immediately create a death benefit for your beneficiaries and a pool of money to pay for covered long term care needs.

Q: What types of insurance products can be linked?
A: A base product such as life insurance or an annuity with a “rider” that provides long term care benefits if needed. This provides multiple benefits, paying out the first benefit, as needed. If you need long-term care, income tax-free reimbursements are available for qualified long-term care expenses. 

Q: What does a Linked Benefit provide me?
A: Linked Benefits policy provides you with:

• A guaranteed death benefit that is generally income tax free – your beneficiaries will receive a death benefit even if you don’t use your LTC benefits or use some or all of it.  
• Value for your money – typically, your death and LTC benefits are significantly greater than your initial premium.
• Flexibility – no matter what happens in your life, you will have a guaranteed level of benefits.

Q: Who should consider Linked Benefits?
A: If you are between ages 55 and 75 with investable assets (money that you won’t necessarily need to fund your retirement) and you want to insure against a time that might require temporary or permanent long-term care, then you should consider a Linked Benefit, especially with the potential for tax savings.

Still have questions? Give us a call and let’s discuss your options.