If you’re like most people you would rather not think about the impact health and aging will have on you and your family. You feel fine, you have a nice job, you are saving for retirement, you do most things right. So perhaps you think Long-Term Care just won’t happen to you. If it does your adult children or spouse can provide the care or you can just take money out of your savings to pay for care.
Like most things in life there is a lot more to the story. First, understand the chance of you or anyone needing Long-Term Care Services and Supports increase dramatically with age. With advances in medical science people require long-term care at all ages. However, once you reach the age of 65 you have a seven in ten chance of needing some type of long-term care service before you pass. The question is “when?” and “how long?” (https://longtermcare.acl.gov/).
People require long-term care due to illness, accidents or the impact of aging. Caregiving is hard. An older spouse is usually not going to be in a good position to be a full-time caregiver. Daughters or daughters-in-law have their own careers, family and other responsibility. Studies show that caregivers suffer both health and financial issues by adding caregiving to their responsibilities.
Paid care is expensive and will continue to get more expensive as years go by. It drains your savings and impacts the lifestyle of the entire family. You can see the average cost of long-term care in your state (home care, adult daycare, assisted living, and nursing home) by clicking here: https://www.ltcnews.com/resources/state-information
Health insurance as well as Medicare (for those 65+) and Medicare Supplements will not pay for any custodial care (help with activities of daily living) which is the most common type of extended care that you will require. They also pay a very limited amount of skilled long-term care. Long-Term Care Insurance is a product that will pay for all types of care (home or facility). Many plans also provide other benefits like case management, bed reservation, respite care and more.
Long-Term Care Insurance works very well. In 2017 the industry paid over $9.2 Billion in benefits to American families. This is money that would have otherwise come out of savings or the care would have become the responsibility of family (https://www.ltcnews.com/articles/long-term-care-insurance-industry-paid-huge-amount-of-benefits-in-2017).
Here are the 7 reasons why a Long-Term Care plan will ease the burden on your family as well as safeguard your savings:
- Choice of care. Most Long-Term Care policies pay benefits for all types of care in the setting you and your family desire. You get to choose how you use your benefits once you qualify for them. Most people want to avoid a nursing home. While you could choose that, most policies provide benefits for care at home, adult daycare, assisted living, memory care as well as a nursing home. Your family doesn’t have to be concerned about the quality of providers as the decisions of the type of care and the providers are left to you and your family.
- Elimination of Sibling Fracture and Stress. Without an advance plan, the responsibilities of how to manage and provide care will fall on the adult children and their families. When a sibling lives farther away from their caregiver brother or sister, they may not realize the day-to-day tasks of being a caregiver or managing paid care. Even strong relationships can fracture with the stress of caregiving. A Long-Term Care policy will eliminate most of this stress, so family can be family.
- Case Management. This is related to number two. Many Long-Term Care policies will pay for a nurse case manager or social worker who will help make a recommendation and develop a plan a care. This is not managed care as you do not have to do what is recommended but it will eliminate the stress placed on one of your adult children attempting to find caregivers or facilities and making arrangements even if they are not providing the care itself.
- Eliminating Stress in Marriage Relationships of Your Adult Children. Let’s face it, women are much better at dealing with this type of thing then men are. They are more natural caregivers and nurturers. So, when you require extended care, the responsibility might be falling on a daughter-in-law. Often this will directly impact your son’s marriage. Long-Term Care Insurance provides the resources for quality care in the setting you and your family desire. Most plans, as mentioned above, provide some type of care management as well. This will reduce the stress and help your son’s family.
- Lifestyle Preservation. Longevity is a real issue with the advances in medical science. This means both you and your spouse might be living when one of you require long-term care. If you are paying for care out of your own savings this will impact the lifestyle of the other spouse (unless you have millions and millions of dollars in savings). Once the person who requires care passes-away, less money will be available for the retirement needs of the surviving spouse. A Long-Term Care policy will safeguard savings so lifestyle is not impacted dramatically.
- Estate Preservation. No matter if you have saved $200,000 or $12,000,000 you probably worked hard to achieve it. Most people would rather keep the savings in the family. A Long-Term Care Insurance policy provides the tax-free benefits so you won’t have to spend-down assets so your children and grand-children can enjoy your legacy. Partnership Long-Term Care policies provide additional dollar-for-dollar asset protection. They are available in most states. Even a small policy can safeguard a large amount of your entire estate depending on the size of your estate.
- Peace-of-mind. As people get older they have more anxiety. People start to worry about who will take of them or how it will be paid for. Once you are older your choices for planning becomes very limited. A Long-Term Care policy you put in place prior to retirement will give you that peace-of-mind for the rest of your life knowing this risk is taken care of eliminating much of the worry. This anxiety is not limited to just you … many adult children, as they see their parents age, start to wonder how their parent will be cared for, who will provide the care and how it will be paid for. While many children may say “sure we will take care of you” they generally don’t know what that means until they become older. A Long-Term Care Insurance policy reduces this anxiety for everyone.
When you consider these and other issues surrounding the financial costs and burdens of aging Long-Term Care Insurance is an easy way to address these concerns. These policies safeguard assets and ease family burden while providing you with quality care and choice. But, what about the cost of the insurance? Is it expensive?
The answer is easy. For most people, Long-Term Care Insurance is very affordable. Most people today purchase policies prior to retirement. Premiums are based on your age at application, your health at the time of application and the total amount of benefit you wish to have. You design the plan. Normally, a Long-Term Care Specialist will be able to make appropriate recommendations after asking you questions about your goals and concerns and factoring the cost of care in the area of the country you plan on living in.
Most people today are in their 50s when they obtain coverage, however people in their 40s and 60s can do so as well affordably depending on health. It is your health that gives you the opportunity to obtain coverage. This is called “underwriting”. Each company has their own requirements.
A Long-Term Care Specialist will ask you detailed questions about your health, medications, surgery history, and family history to help determine which insurance company to choose in order to find the best coverage at the best value. If an insurance agent just gives you a quote without speaking with you in detail then they are not doing their job and the “quote” they are giving you will be very questionable.
The American Association for Long-Term Care Insurance (AALTCI), a national consumer education and advocacy group, suggests using a Long-Term Care Specialist instead of a general insurance agent or financial advisor.
The AALTCI defines a specialist as a person who has been working primarily in long-term care for at least three years, has at least 100 clients with an LTC insurance policy and works with at least three major insurance companies.
Premiums are also intended to remain level. This means the premium does not go up each year or every few years unless you have a plan which allows you to purchase additional coverage in the future. In that case, you are self-increasing your premium.
Premiums also do not change with age or health or claim status (although most policies will waive the premium when you are receiving the benefits).
This does not mean a premium can never go up. You may have read stories about premium increases on older “legacy” policies. These were all priced prior to the interest rate crash. Today’s policies fall under new regulations for rate stability and are priced for the low-interest rate environment. These new plans also have much more conservative and scientific underwriting than those much older plans did. The Society of Actuaries says the chance for increases on these new plans is very minimal.
The only way for an increase is for the insurance company to ask your state’s Department of Insurance by showing a substantial need and it must impact a full class of people, not just you.
The bottom line is simple: Long-Term Care Insurance is a key part of your pre-retirement plan to safeguard your savings and reduce the burden placed on your loved ones. Easy, affordable and rate stable.
Ideally, act before you retire for the most affordable options.