Jean Chatzky, the financial editor for NBC’s “Today Show” appeared with Matt Lauer to discuss the need for consumers to plan in advance for the high costs of Long Term Care. This has been a big media topic as so many people require extended health care due to illness, accidents or the impact of aging. 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 a consumer need to be prepared for … health care expenses.
“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.” Lauer said.
Lauer pointed out these costs do not pay for Long Term Care something he reported that 7 in 10 people will need at some point.
“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,” said Chatzky.
Traditional Long Term Care Insurance will pay for any type 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 which provide additional dollar-for-dollar asset protection.
If you’ve been saving for years and are looking to leave something to your kids, this is a way to make sure that all of your money doesn’t go to pay for health care according to Chatzky.
Hybrid policies also exist. These are Life Insurance Policies or Annuities with a Long Term Care benefit. They allow a consumer to tap into your benefit — reducing the death benefit —if you need Long Term Care. If not you have a 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 have inflation options. Experts suggest speaking with a specialist who can explain the options available.
Lauer asked Chatzky when 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,” she explained. 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),” she said. She also recommends working with a specialist in Long Term Care and not to wait too long.
LTC specialists indicate that premiums are based not only on the benefits you purchase but also based on the application age you get the policy and your health at the time of application.
“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," explained Jesse Slome, executive director of the AALTCI.
There are a number of online resources to learn more about Long Term Care Planning:
LTC Planning News: includes news stories on health and Long Term Care Planning. It also has videos and website links as well: www.longtermcareplanningnews.com.
US Department of Health and Human Services LTC site: https://longtermcare.acl.gov.
The National Institute on Aging: https://nihseniorhealth.gov/
The American Association for Long Term Care Insurance: www.aaltci.org