Several years ago, Jean Chatzky, the financial editor for NBC's "Today Show," appeared with Matt Lauer when he was still hosting the program to discuss the need for consumers to plan in advance for long-term care costs.
The issue of long-term care is both a cash flow issue and a family issue. It has been a big media topic due to an aging America. Because of longevity, more and more people require extended health care due to an illness, accident, or the impact of aging.
Cost of Long-Term Care is Expensive
Matt Lauer pointed out that medical costs, especially unexpected ones, can add up. He says most people want to have a healthy retirement, but there's a big wild card when it comes to aging and long-term care costs. Consumers need to prepare families and finances for the financial costs and burdens that come with getting older.
"A 65-year-old couple will need an estimated $260,000 to pay for unreimbursed medical expenses through retirement — and that doesn't include Long-Term Care, according to Fidelity Investments. If you want to have a healthy retirement, there's a big wild card you need to be prepared for health care expenses."Matt Lauer
The cost of long-term health care today is even higher. You can find the current and future cost of long-term care services where you live by using the LTC NEWS Cost of Care Calculator by clicking here.
Lauer pointed out health insurance (including Medicareand supplements) does not pay for long-term care costs, something he reported that 7 in 10 people would need at some point in their lifetime.
“Long-Term Care will cost anywhere from $44,000 to $96,000 a year depending on the type of care you require but you need a plan to pay for that.”Jean Chatzky, Financial Editor for NBC’s “Today Show”
In just the few years since the show aired, the costs of long-term care services have increased. According to the LTC NEWS Cost of Care Calculator, a nursing home's national average cost in 2020 is $106,488 a year. The base assisted living national average cost is $50,924 a year. A year's worth of home care, based on a 44-hour week, averages $53,402.
The cost of care is expected to increase in the decades ahead. As labor costs increase and supply increases due to greater need, long-term care's financial impact is dramatic.
LTC Insurance Can Be the Solution
Traditional Long-Term Care Insurance will pay for all levels of care, at home or in a facility. Chatzky reports the rate for a 60-year-old couple in normal health is about $2,100 a year for a mid-range policy, according to the American Association for Long-Term Care Insurance (AALTCI). The AALTCI is a national advocacy group to educate Americans on Long-Term Care Planning.
Premiums on these policies may be tax-deductible. The AALTCI also says most states offer partnership policies that provide additional dollar-for-dollar asset protection.
Chatzky says that if you've been saving for years and are looking to leave something to your kids, Long-Term Care Insurance is a way to make sure that all of your money doesn't go to pay for health care.
Hybrid policies also exist. These are life insurance policies or annuities with a long-term care benefit. These policies allow consumers to tap into the policy to pay for long-term care, reducing the death benefit.
If you never require long-term care, your family can still collect on the death benefit or the cash value of the annuity. While the Today Show reported that these plans do not have inflation options, the better insurance companies do offer inflation options on these hybrid policies.
Experts suggest speaking with a specialist who can explain the options available.
Lauer asked Chatzky when is the best time to start shopping for long-term care solutions.
“You want to start shopping at about age 50 and you want to ramp up your shopping very quickly.”Jean Chatzky
She explained premiums after age 60 are higher but health conditions start to set in which could make premiums high or make a person uninsurable.
“You want an “A” rated insurer and shop around (the top companies).”Jean Chatzky
Find Expert Help
She also recommends working with a Long-Tern Care Insurance specialist and not wait too long to obtain coverage.
Long-Term Care specialists indicate that premiums are based not only on the benefits you purchase but also on the application age you get the policy and your health.
“We will end the year with some seven million Americans who have traditional Long-Term Care Insurance protection and another million who have a linked-benefit (hybrid) product that provides some LTC protection."Jesse Slome, executive director of the AALTCI.
There are several online resources to learn more about long-term care planning:
LTC News: includes news stories on health and Long-Term Care Planning. It also has videos and website links as well: www.ltcnews.com.
US Department of Health and Human Services LTC site: www.longtermcare.acl.gov
The National Institute on Aging: www.nihseniorhealth.gov
The American Association for Long-Term Care Insurance: www.aaltci.org
Remember that Long-Term Care Insurance is custom designed. You get to decide the total amount of coverage you wish to have in place. Experts say even a small policy can reduce the stress and burdens that are otherwise placed on your family.
In 2020 the major insurance companies paid over $11.6 Billion in benefits from these Long-Term Care Insurance policies. These benefits help American families address the financial costs and burdens that come from extended care.
Long-Term Care Insurance is Affordable
You might read otherwise, but the fact is Long-Term Care Insurance is affordable, especially if you are under age 65. However, premiums can vary well over 100% or more between insurance companies. A Long-Term Care specialist will shop all the major companies to match you with your age, health, and family history to find you the best value.
Just because you spoke with one agent and they showed you very high premiums don't give up. Seek a genuine specialist who works with the major companies and understands underwriting, policy design, and claims.
Find a trusted and experienced Long-Term Care Insurance specialist by clicking here.
Take a few minutes and read the LTC NEWS Ultimate Long-Term Care Guide. Click here to read.
The best time to plan is in your 40s or 50s when premiums are low, and your health is generally good.
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