It is not unusual to see several articles from various publications discuss the costs of Long-Term Care Insurance. The topic of long-term health care has become a trending topic in recent years but has increased in importance due to an aging society and the consequences of COVID-19.
More people than ever either know someone personally or know an individual who needs help with daily activities. It is rare not to hear about someone with Alzheimer's or another form of dementia. While longevity gives us more years, declining health and deteriorating bodies lead to long-term health care.
Care is Expensive - Health Insurance & Medicare Pay Little
This care is expensive, and health insurance, including Medicare and supplements, will not pay for most of this care. Without traditional insurance to pay for long-term care, families must face paying for care out of savings or forcing family members into the role of being a caregiver. Neither are good options.
The cost of care in some areas of the country is already in the six figures. Generally, in-home care will cost less; however, greater demand for care and rising labor costs will make all long-term health care services more expensive in the years ahead - Cost of Care Calculator - Choose Your State | LTC News.
The only other payors of long-term care expenses are Medicaid and Long-Term Care Insurance. Medicaid requires you to have little or no income and assets to qualify for coverage. The only other option is Long-Term Care Insurance, which is why it is getting much media attention.
Misleading Articles and Websites
Many of these articles are factually misleading or inaccurate in many ways. They often talk about "increasing premiums" and "premium increases." The accuracy of these articles is somewhat questionable and even misleading.
Old "legacy" policies have had premium increases; however, today's Long-Term Care Insurance is affordable for many American families, especially those who plan in their 40s or 50s before retirement. Plus, Long-Term Care Insurance is custom designed. There is no "set price" as you, with the help of a specialist, design a plan that meets your needs and budget.
Many states have rate stability rules in place for Long-Term Care Insurance. Every insurer now prices their policies based on the extremely low-interest rate environment - Why Are There Articles About LTC Insurance Premiums Going Up? | LTC News.
So, where do you start to get accurate information? Generally, your computer, smartphone, or tablet. If you are like many people these days, you probably start with the internet to research products and services. It is easy and convenient. It can also be a maze of inaccurate or misleading information.
When you search for long-term care planning and long-term care insurance, you can find a wide variety of available articles and websites. These articles and websites suggest anything from LTC insurance is affordable and essential to very expensive and not necessary.
Get Accurate Information on Long-Term Care Insurance
Now what? First, understand everyone has a point of view, and the internet is the ultimate in free speech. So, you should review sources and use some common sense.
If you have first-hand knowledge of a parent or family member needing extended care, you know the consequences of long-term care on family and finances. The financial and emotional impact is tremendous. If you have not yet had one of these experiences, then you need to review the facts.
The U.S. Department of Human Services says about half of us will need long-term care services in our lifetime. While this doesn't mean everyone will need full-time care, it means your risk is high as you get older. With medical science advancing, we live longer. As you age, you will need help with daily living activities or require supervision due to memory loss. We need long-term care due to illnesses, accidents, or the impact of aging.
Take a moment can review your own history. Compare yourself today with your 25-year-old self. As we get older, our bodies change; you probably have already noticed that! Our health declines. Sometimes our health declines slowly and for others more quickly. Either way, we all are on a one-way street.
Don't forget ... our memory. As we get older, we face a more significant risk of cognitive decline.
Prepare Before Retirement. Health Changes with Aging
If you're honest with yourself, you have admitted the changes you have already seen in your health, your body, and as you get even older, your mind. These changes will often lead to your need for help with daily living activities or even supervision due to cognitive decline.
The risk of Alzheimer's disease and other types of dementia increases with age. 1-in-9 Americans over 65 have Alzheimer's disease. (Alzheimer's Association). One-third of Americans over age 85 are afflicted with the illness. (Alzheimer's Association). 1-in-3 seniors die with Alzheimer's or another kind of dementia. (Centers for Disease Control). The proportion of People with Alzheimer's Disease in the United States by Age: (Alzheimer's Association) 85+ years – 38%, 75-84 years, 44%, 65-74 years, 15%, <65 years, 4% - Alzheimer's Disease - 6th Biggest Cause of Death | LTC News.
Alzheimer's is only one type of condition which can cause the need for care.
Health insurance and Medicare (including Medicare Supplements) will only pay for a small amount of long-term skilled care. They pay nothing toward long-term custodial care (help with daily living activities or supervision due to cognitive issues). Custodial care is the type of care most people will need on an extended basis.
Unless you are little or no assets (Medicaid) or Long-Term Care Insurance, you are on your own.
Truth - LTC Insurance is Affordable and Rate Stable
Long-Term Care Insurance is very affordable for many people and an easy way to protect your future retirement assets. This protection includes your 401(k), 403(b), IRA, and other savings. Also, these plans can help ease the burdens placed on your family during a long-term care event.
Without an advance plan, a family member, spouse, daughter, or daughter-in-law become the default caregivers. This puts an incredible burden on them emotionally, physically, and financially - Unpaid Family Caregivers Now Total 53 Million People | LTC News.
LTC Insurance - More Affordable Than You Think
You may have read that these policies are expensive. While you could design a costly plan, it generally would lead to being over-insured. For example, a married 50-year-old male, In excellent health could have a plan from several Long-Term Care insurers for as little as $130 a month or less. In this example, its initial benefits would be $3,500 a month, a $150,000 pool both growing 3% compounded every year. What this means is the benefits, not the premium, increase every year.
By the time the 50-year-old reaches 80, they would have a $364,089 pool with $8,495 a month available to them, all tax-free. In a partnership state (which provides additional dollar-for-dollar asset protection), you have even more protection. Most experts suggest you have enough benefits to make a catastrophic situation manageable. If you live in a state where the cost of long-term care is very high (northeast or northwest, for example), you will increase the benefit.
Women cost more than men because of their longevity; however, spousal discounts, good health discounts, and shared benefit plans can make premiums affordable.
LTC Insurance is Custom Designed
If you have a strong family history of memory loss or other health issues that cause longer extended care situations, an Long-Term Care Insurance specialist may recommend more extensive initial benefits. There are even options for unlimited long-term care benefits available.
Don't forget many tax incentives are available when you purchase an LTC policy. You can also use a health savings account to pay for premiums as well on a pre-tax basis. While most people are buying LTC insurance in their 50's and even younger, if you have stable health, you can obtain quality protection at affordable premiums in your 60's - Are Long-Term Care Insurance Policies Expensive? | LTC News.
"A typical couple where both spouses are age 60 will pay between $100 and $150 a month each for American Association for Long-Term Care Insurance (long-term care insurance protection." The AALTCI is a national consumer education and advocacy group.Jesse Slome, director of the AALTCI).
“This has never been a one-size-fits-all product, and many consumers are regrettably presented with just one option, often the most costly."
Premiums Can Vary Over 100% Between Companies
Costs for virtually identical policy coverage still vary significantly from one insurer to the next.
"Insurers each set their own rates, and the price for virtually identical coverage can vary," Jesse Slome states.
Premiums can vary as much as 100% for the exact same coverage. – "You generally only buy Long-Term Care insurance once, so it's important to do it correctly the first time," Jesse Slome said.
Considering the costs of long-term health care services, LTC Insurance is a bargain. The insurance companies are paying benefits in a big way. The nation's long-term care insurance companies paid $11.6 Billion in claim benefits in 2020, according to the AALTCI.
Rate Stability Rules Provide Peace-of-Mind
The good news is today: insurance companies have priced plans based on the low-interest-rate environment. Regulations require more advance thought in the pricing of products before they even hit the market. The regulations don't mean there is no risk, but you can feel good about today's products' pricing.
Rate stability rules are in force in most states, and they require very conservative assumptions than ever before. It makes the chance of future increases low, according to a study from the AALTCI. You can read the article discussing the study by clicking here.
Some plans guarantee no rate increases if you feel you must have one for peace of mind. Limited pay options are also available where you pay premiums for only ten years, and you have a fully paid policy. There are also asset-based "hybrid" policies that also offer death benefits.
The consumer has more choices available today than ever before.
Seek Help from LTC Insurance Specialist
Find a specialist in Long-Term Care Insurance who works with all the major companies, not just one or two. Be sure they have real-world experience. The AALTCI suggests three questions to determine an insurance professional's expertise in the field:
- How many years have you focused on long-term care planning?
- How many long-term care insurance policies have you sold?
- How many long-term care insurers are you appointed with?
An experienced specialist will have at least 300 or more clients with a Long-Term Care Insurance policy. Your top industry specialists may have thousands.
Find a trusted and experienced specialist - Work With a Specialist | LTC News.
The financial costs and burdens of aging are real. The ability to safeguard your future and provide peace of mind should be an essential part of your overall retirement plan.
When you own a Long-Term Care Insurance policy, you own a solution. You don't need to spend a lot of money to ensure your choice of quality care options in the setting you will desire in the future. Your loved ones will have the time to be family and not be burdens with the job of being a caregiver.
Don't delay; however, your good health allows you to plan.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
LTC NEWS offers multiple tools and resources to help you research the financial costs and burdens of aging so you can find an affordable solution.
You can compare the major insurance companies that offer Long-Term Care Insurance products here - Top Insurers for Long-Term Care Insurance | LTC News.
The Ultimate Long-Term Care Guide is an outstanding read to help you get a good overview of the topic area. There are also available tax incentives. See if these tax incentives are helpful - Long-Term Care Tax Benefits Guide.
Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.
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Looking for Quality Caregivers? Need Help Filing an LTC Insurance Claim?
If a loved one already needs in-home care or owns a Long-Term Care Insurance policy and needs assistance filing the claim, LTC NEWS is here to help.
LTC NEWS provides free assistance with no obligation - Filing a Long-Term Care Insurance Claim | LTC News. You can also help find caregivers and get recommendations for a proper care plan, whether a person has a policy or not.
Benefits of Reverse Mortgages
There are many people today that have much of their savings invested in their home. With today's reverse mortgages, you can use the money in your home to fund a Long-Term Care Insurance policy, add retirement income, or even pay for in-home care if you need care now.
Learn more now - Reverse Mortgages | LTC News.
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