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Published: Jan 4th, 2016

Affordable & Effective Long-Term Care Insurance

Affordable & Effective Long-Term Care Insurance
Article Updated:October 26th, 2019

A story in the New York Times had the headline, “Long-Term Care Insurance Can Be Costly but Effective”. The story hit the mark on many areas but the cost of today's Long-Term Care Insurance policies are actually quite affordable, especially when purchased in your 40s and 50s as part of your retirement planning.

Long-Term Care Insurance is very helpful for people who wish to protect income, retirement savings and other assets from the expensive costs of long-term care. People are also concerned about the stress and burdens that extended care places on their family. Long-Term Care Insurance reduces the burdens otherwise placed on loved ones when an extended Long Term Health Care event occurs. 

Long-Term Care Insurance - Helping American Families Every Day

In fact, a report published by the American Association for Long-Term Care Insurance (AALTCI), a national consumer advocacy and education group, reports that in 2018 the major insurance companies paid nearly $10.3 billion in claims over $28 million a day. 

Not "If" You Will Need Long-Term Care but "When" and "How Long"

These long-term care events happen often. The US Department of Health and Human Services says if you reach the age of 65 you have a 70% chance of needing some type of Long-Term Care service before you pass. You can learn more from the HHS website set up for LTC information: longtermcare.acl.gov

Plus, the United Health Foundation reports 1 in 7 Americans today are aged 65 and older. The population growth continues to grow as more people live longer than ever before because of advances in medical science. This adds up to a problem that will impact many people.

The New York Times article quotes Marguerita Cheng, a certified financial planner who runs Blue Ocean Global Wealth in Rockville, Maryland. She said she was glad she recommended Long-Term Care Insurance for her father, who died this year at the age of 82.

“He had bought a policy when he was 68 with a $125 daily benefit with 5 percent simple inflation protection.” Last year, his daily care cost $256 but almost all of it was covered because the benefit had increased to $219.75.

Better Start Planning Now for a Future Successful Retirement

Today, most people start looking at Long-Term Care Insurance coverage in their 40’s and 50’s when they can enjoy lower premiums because of both their age and health. 

Premiums are based in part on your age and health at the time of application. This means the younger you are when you purchase the lower the premium will be.

For example, a healthy married male, age 54 in Texas can obtain $4000 a month benefit, with an initial $150,000 pool of money, partnership certified with 3% compound inflation, for about $90 a month.

LTC Insurance is Custom Designed

Long-Term Care Insurance is custom-designed to fit your needs, age, health and other considerations. The key, according to several Long-Term Care Specialists, is to design a plan to make a catastrophic event manageable.

Most states have partnership programs available that provide dollar-for-dollar asset protection if you have a qualified policy. The Long-Term Care Partnership Program is a collaboration between state government and insurance companies. Under this partnership, applicants who purchase qualifying Long-Term Care Insurance policies can access Medicaid coverage while retaining assets they would normally be required to spend on their Long Term Health Care. This is referred to as dollar for dollar asset protection or asset disregard.

Plus federal and state tax advantages may be available as well.
The Times article reports that the American Association for Long-Term Care Insurance (www.aaLTCi.org) says unlike health insurance in the Affordable Care Act era, companies can deny Long-Term Care coverage based on your medical history. If you have health situations like diabetes, Parkinson’s disease or a stroke, you may not qualify at all or have very limited options. This is another reason to obtain coverage when you are younger and healthier.

"Unlike car insurance or even most life insurance policies which are pretty easy to compare, Long-Term Care insurance policies can be quite distinctive. Your first decision is finding an expert who understands the differences and works on your behalf to recommend the best coverage for the least cost from a high-quality company," said Jesse Slome, Executive Director of the AALTCI. 

Learning the options available in making Long-Term Care Insurance part of your retirement plan may provide peace-of-mind as well as the ability to protect your income and assets. These policies also give you access to your choice of quality care in the setting you desire.

At some point, you will need extended care and either help with everyday living activities or supervision due to memory loss. The unknown is when this will happen and for how long.