Long-Term Care Insurance
Protecting your retirement consists of more than just setting aside a source of income for your golden years. It also consists of protecting yourself and your estate against possible financial hardship caused by declining health. While day to day health concerns can be taken care of by Medicare and Medicare supplements, long term health care has to be addressed as well. As we all know, Americans are living longer lives – but many of them are living longer lives in declining health and with chronic conditions.
The term “long-term care” has a wide variety of meanings nowadays – beyond just typical nursing homes. For those in need of such care options also exist such as assisted living, adult day care, dementia care, and home health care assistance.
Approximately 70% of people currently turning age 65 will require long-term care at some point in their lifetime and 18% of those will require at least a year in a nursing facility. The average price in 2016 for a private room in a nursing facility cost approximately $92,378 per year or 7,845 per month. Those costs are even more for urban and expensive areas. These costs are also not covered by Medicare while Medicaid only covers these costs as a last resort for the financially destitute.
The majority of Americans cannot afford those types of expenses – and would not qualify for Medicaid. This leaves them with several options for paying for long-term care like liquidating their estates, re-directing their investment income towards long-term care, or relying on family support. None of these are desirable decisions – as they can end up leaving your family in debt or leaving no estate for your heirs.
Long-term care insurance (LTCI) steps in to provide coverage for those types of situations by reimbursing policyholders a daily amount for a certain amount of time (generally 2 – 10 years). Some plans also include protection that will raise the amount of the reimbursement every year to offset the cost of inflation.
LTCI is generally purchased by a person in their 50s and requires planning to fund. Many are put off by the cost and may question the justification of the expense for protection that they may never need. No one likes to think about them needing assistance in the event they are unable to care for themselves, but it is a reality of the aging process.
LTCI is generally not appropriate for those who have limited income ($50,000 or less) or are very rich. But most retirees won’t fall into these two categories. LTCI can protect your estate for your heirs, protect your family against debt and the physical burden of your care, give you more choices over the quality of your care, and preserve your retirement investments for you to enjoy.
Affordability is a key concern for these policies. We encourage our clients to start shopping for this type of protection when they are in their 50s – this gives them the advantage of time and will result in cheaper premiums. We also work with a variety of companies and can shop around for you to get the best package for your dollar. LTCIs have a variety of factors such as elimination periods, spousal protection, term lengths, and daily coverage amounts that can affect the cost of the policy. Everyone’s situation is different and we are here to work with you to customize a plan that’s right for you.