Long-term Care Insurance is Affordable & Effective When Designed Correctly
A recent 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 this insurance is actually quite affordable, especially when purchased as part of your retirement planning.
Long Term Care Insurance is very helpful for people who wish to protect retirement savings and other assets and reduce the burden placed on loved ones when an extended Long Term Health Care event occurs. 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 2014 insurance companies paid nearly $8 billion in claims … over $21 million dollars a day in Long Term Care claims.
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: www.longtermcare.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 which 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,” Ms. Cheng said. Last year, his daily care cost $256 but almost all of it was covered because the benefit had increased to $219.75.
Today, most people start looking at Long Term Care Insurance coverage in their 40’s and 50’s when their health is much better and premiums, which are based in part on age and health at the time of application, is much more affordable.
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.
Depending on company, age and gender, you can design an affordable plan based on when and where you plan to retire, and how you will finance your future retirement. The key, according to a number of Long Term Care Specialists, is to make a catastrophic event manageable.
Many states have partnership programs available which 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. His national consumer advocacy and information group will find a specialist with the experience to make the proper recommendations. Their number is 818-597-3227.
Learning the options available in making Long Term Care Insurance part of your retirement plan may provide peace-of-mind as well as protect your assets and provide quality care when you will, at some point, need it.