News stories about Long-Term Care Insurance are sometimes off the mark or misleading. Sometimes the article can be both on the mark but misleading at the same time.
A recent story in the New York Times is an example with the headline, "Long-Term Care Insurance Can Be Costly but Effective." The story hit the mark in many areas. Still, the cost of today's Long-Term Care Insurance policies is actually quite affordable, especially when purchased in your 40s and 50s as part of your retirement planning.
Long-Term Care Insurance is beneficial 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 families. Long-Term Care Insurance reduces the burdens otherwise placed on loved ones when an extended long-term health care event occurs.
LTC Insurance Can Be Affordable
While Long-Term Care Insurance can be expensive, policy premiums can vary over 100% between insurance companies for the same coverage. Plus, LTC Insurance is custom designed, so you get to decide the amount of coverage you wish to have in place.
There seems to be little question about the need for long-term health care planning. Health insurance - including Medicare- will NOT pay for most long-term health care services. Medicaid requires you to have little or no income or assets to qualify for benefits. Without Long-Term Care Insurance, you are on your own, and the costs can be devastating on your family, not to mention the emotional consequences on your family.
Planning for long-term care is a critical part of the retirement planning process. It is impossible to predict how long your future retirement income will last. However, when you own a Long-Term Care policy, you have guaranteed tax-free benefits that limit the exposure these costs would have on your income and assets.
LTC 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 2020 the major insurance companies paid over $11.6 billion in claims - almost $31 million a day.
These guaranteed tax-free benefits from affordable Long-Term Care policies provide the resources to pay for quality care in the setting you desire, including in-home care, without placing a burden on those you love.
Without these benefits, families would be forced to become caregivers, or they would sell off your savings and investments to pay for care services. Not only would you be using your own money, but if your need for care occurs during a market downturn, they would be selling at a loss.
As we know, unexpected and unforeseen events like 9/11, the 2008 mortgage and banking crisis, and the virus crisis can have a devastating impact on your assets. The guaranteed benefits from a Long-Term Care Insurance policy allow you to safeguard savings no matter what happens with the markets.
Remember, you can't time the markets, nor can you time when you will need help with daily activities of supervision due to cognitive decline.
Not "If" but "When" and "How Long"
The fact is that as you get older, you face declines in your health, body, and mind. Many of these changes in your health will lead to a higher risk of needing help with daily activities or supervision due to memory loss.
The U.S. Department of Health and Human Services says if you reach the age of 65, you have about a 50/50 chance of needing long-term health care. You can learn more from the HHS website for LTC information - LTC Home | ACL Administration for Community Living.
Plus, the United Health Foundation reports 1 in 7 Americans today are aged 65 and older. 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.
According to the Administration on Aging, between 2009 and 2019, the number of Americans aged 45-64 (who will reach age 65 over the next two decades) increased by 4%, from 80.3 million to 83.3 million. The number of Americans age 60 and older increased by 34%, from 55.7 million to 74.6 million.
We live in an aging society, and longevity means most of us have many more years ahead. The consequences on families and finances can be considerable unless planned for in advance.
Long-Term Care Insurance - A Solution for Longevity Planning
Long-Term Care Insurance has become a vital part of retirement planning. These plans provide guaranteed tax-free benefits giving the policyholder access to their choice of quality care services, including in-home care, not only protecting assets but reducing the stress and anxiety that otherwise is placed on the adult children.
The New York Times quotes Marguerita Cheng, a certified financial planner who runs Blue Ocean Global Wealth in Rockville, Maryland, about the importance of long-term care planning. 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 due to their age and health.
Premiums are based in part on your age and health at the time of application. The younger you are when you purchase a policy, 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 $140 a month.
Women do cost more due to their longevity and longer average long-term care need, but spousal discounts and shared benefit plans can be designed to make plans very affordable for most people.
LTC Insurance is Custom Designed
Long-Term Care Insurance is custom-designed to fit your needs, age, health, and other considerations. According to several Long-Term Care Specialists, the key is to design a plan to make a catastrophic event more 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 the 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 usually 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 also be available when you purchase a Long-Term Care Insurance policy.
Care Costs Will Increase Dramatically in Decades Ahead
The LTC NEWS Cost of Care Calculator will show you both the current and future cost of care services where you live. Plus, you can see any available tax incentives and other essential information that apply to your state - Cost of Care Calculator - Choose Your State | LTC News.
Keep in mind that long-term health care services are costly and increase every year due to growing demand and higher labor costs. The cost of care does vary depending on where you live.
Act in Your 40s or 50s When You Still Enjoy Good Health
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 Insurance 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 few options. Your current good health is another reason to obtain coverage when you are younger and healthier to take advantage of your insurability and lower cost for coverage.
"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.
LTC Insurance is Easy and Affordable Income and Asset Protection
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.
Planning is More Than Just About Money
Yes, money is important, and you have worked hard to save whatever you have saved so far in your lifetime. However, planning for the future changes in your health, body, and mind is not just about asset protection. Planning for long-term health care is about family.
Family caregivers are usually unprepared and untrained. By the time you need care, your adult children will have careers and families of their own. It would be challenging to juggle caregiving with their other responsibilities.
When you own an affordable Long-Term Care policy, you own a solution. The solution safeguards assets, but it does much more than just that. It gives you access to your choice of care, keeping you in control. You get to decide how your care will be delivered. Plus, your loved ones will have the time to be family instead of caregivers.
Don't delay; your health can change at any time. Most experts recommend planning in your 40s or 50s. Be sure to seek the help of a licensed and experienced Long-Term Care Insurance special to help you shop and navigate all the available options - Work With a Specialist | LTC News.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
How is the best way to plan for your own longevity? Retirement planning should happen well before you retire. This includes planning for the financial costs and burdens of aging.
Long-Term Care Insurance, for many American families, provides the resources and services to give you control over your own life. You will have a choice of the type and location of your future long-term care needs. This means control and independence.
LTC NEWS Tools Helpful for Research
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?
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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.