A conversation about retirement these days with people of a “certain age” usually includes how they handle the high costs of long-term care services. Not a fun topic, but if you are a Generation X or Late-Boomer you probably have or currently are experiencing the aging issues of your parents. It is rare when a person age 45 to 65 doesn’t know a family member, neighbor or even a friend or co-worker who hasn’t been impacted by long-term care.
Nobody wants to be in a nursing home, memory care facility or even assisted living. However, longevity is resulting in more and more Americans requiring help with normal activities of daily living. As you get older the risk of cognitive decline also increases requiring supervision care.
Long-Term Care Insurance is often the best way to protect assets from the costs of extended care. Some people think they have this benefit at work. This is usually not the case. Unfortunately, there are several misperceptions which prevent people from protecting their retirement accounts from the high costs and stress as a long-term care event.
- “I have long-term care insurance at work” – It is unlikely you actually have long-term care insurance. Very few employers offer Long-Term Care Insurance. Those that do rarely help pay for it making the premium often more expensive than you can get outside of a group. The real issue is many people confuse Long-Term Care Insurance with Long-Term Disability Insurance.
Long-Term Disability insurance replaces part of your salary if you are unable to work due to disability. It pays nothing toward the cost of any care you require. Many employers’ provide short-term disability benefits which cover three to six months of compensation paying your salary if you are unable to work. Once that expires a Long-Term Disability plan would kick in. Most of these disability plans will pay up to 60% of your salary until you return to work or age 65. Many employers provide this as a benefit at a cost to the employee. This is a policy that is not portable and it is not a solution for long-term care services and supports.
Long-Term Care Insurance pays nothing toward income. It pays for the costs of extended care. This would include home health aides, nurses, physical and speech therapy as well as adult day care, assisted living, memory care, and nursing home care. These policies you own and have nothing to do with your age or whether you are employed or retired. The cost of care can be as much as $100,000 a year for skilled nursing home care depending on your location.
- “Health insurance pays for this.” - No, health insurance, or for that matter, Medicare and supplements, will only pay for a limited amount of skilled care. Most long-term care is custodial and that is not paid for by health insurance or Medicare. This means you will pay out of pocket or your family will provide the care … or both.
- “My spouse will take care of me” – As much as your spouse or partner may love you, providing long-term care services for any person is not easy. It becomes even more difficult when you are older. Often, people require help with bathing, going to the bathroom, dressing and other normal living activities. It would be hard at age 40 to perform these services much less if you are age 80. Plus, it is also embarrassing for many people to have a loved one help them with very personal things. It can be easier for a professional caregiver to help and allow the family the time to be family. The same goes with your children. They have or will have, their own careers and family responsibilities. Plus, what we often forget, they get older as well. How old will your children be when you are 75 or 80 years-old? Family caregivers are not a good option.
- “It is hard to make a claim and they don’t pay the claims anyhow” - The opposite is true. The U.S. Department of Health and Human Services study showed that 97.6% of Long-Term Care Insurance claims are paid. The promises made by these companies and promises which are kept. Huge amounts of money each day are being paid to American families helping them safeguard their assets and reduce the stress on their family.
- “Long-Term Care Insurance is expensive” – The fact is Long-Term Care Insurance policies are very affordable. Many articles you might read misrepresent the facts. Premiums are based on your age when you obtain coverage, your health and the amount of benefits you apply for. You design the policy so the premium can range from very low to high. If you get a plan in your 40s or 50s many people can design a plan for under $100 a month. If you are in your 70s getting affordable coverage will be more difficult because of the advanced age and your health. However, a long-term care specialist can help you find an affordable plan whether you are 40 or 70.
So, what does Long-Term Care Insurance cost? Brent Donarski, a 30-year veteran specialist in long-term care planning runs www.myltcspecialist.com. He says that a majority of people he speaks with nationwide are usually very surprised how affordable LTC insurance happens to be.
He gives an example of a Missouri couple, age 55 and 50, in very good health. They could obtain a plan which initially pays $4000 a month with an initial pool of money of $125,000 each both growing 3% compounded each year. This would include spousal shared benefits which mean if one of them were to exhaust their benefits they could use the other spouse’s benefit but if a spouse passes, the premium disappears and the full unused benefit goes to the survivor. Premiums couple be as low as $229 a month. This plan would qualify for the Missouri Partnership program providing them with additional dollar-for-dollar asset protection.
Donarski says the bigger the benefit the larger the premium, likewise, the smaller the benefit the smaller the premium.
“The consumer can custom design their plan. We can develop outstanding coverage which fits most budgets,” Donarski said.
Forty-five states offer partnership plans. With the additional asset protection offered by the program, it gives a person the ability to design just the right size plan without over-insuring.
Total asset plans are available for those with larger estates or family history which includes bloodlines with Alzheimer’s or dementia which lasts very long periods of time. This would provide a person with unlimited long-term care benefits. One company, One America, provides unlimited long-term care benefits with an asset-based plan which includes a second-to-die death benefit. One traditional company, National Guardian Life, also provides an option for unlimited long-term care benefits. It also offers a return of premium rider at additional cost.
The experts say the best time to plan is when you are younger and enjoy better health. Acting prior to retirement gives you the most choices at the lowest cost. Start your online research by looking at the current cost of long-term care services in your state. You can also find the availability of partnership plans and tax incentives. Find your state on the LTC NEWS MAP: https://www.ltcnews.com/resources/state-information
LTC NEWS can help you find a qualified specialist. Working with an experienced specialist will save you money and help you choose appropriate coverage at the best value: https://www.ltcnews.com/contact