Happily, we have survived Tax Day 2018. But there is another “elephant in the room” that no one except the well-healed and the well-insured like to talk about – and that is long-term care insurance (LTC). This insurance is designed to cover many of the expenses, costs of nursing home, assisted living or in-home care, that are not covered by Medicare.
When we were young, the thought of paying premiums to our possible future as an old, sick person was pretty much ridiculous. Most of us had other places to put our hard-earned pay checks: groceries, mortgages, braces, family trips. But now that we are the older generation, the need to insure against the ravages of old age, rears its ugly head.
What to do? What are the odds we will need it? If we haven’t already purchased long-term care insurance, how can we jump on the bandwagon without selling the farm?
Guided by a recent article in the AARP Bulletin, let’s take a brief look at long-term care insurance.
Who needs long-term care insurance?
According to the Dept. of Health and Human Services, “By the time you reach 65, chances are about 50-50 that you’ll need paid long-term care. And if you pay out of pocket, you’ll spend about $140,000.”
That stat in hand, the tricky part is that none of us know how long we will need paid care. Still, of that cohort many (48%) will need it for less than one year. So, it’s a gamble with an outcome no one can predict.
Other factors concerning the cost of LTC include the annual cost of nursing care in a given community. For example, the cheapest state only costs about $54,000 annually for a semiprivate room. On the other hand, Connecticut cost about three times that much.
What you need to know about long-term care:
- Traditional policies don’t cut it – Howard Gleckman, the author of “Caring for our Parents,” observed that the traditional long-term care insurance is not very popular these days. With stipulations such as a daily benefit of $160 for nursing care, three-months wait time and a maximum of three years coverage, the stand-alone policies have fallen out of favor.
- Coverage may be too expensive or don’t need it – Research firm LifePlans noted that premiums average about $2,700 a year, which is much too much for most Americans. The firm suggests these individuals tap into assets or buy LCT through Medicaid, once thay have spent down to very little. On the other side, if you can pay for outside care out of your pocket and choose not to invest in care insurance, you may need to intensify your savings plan.
- New types of insurance – Whole life insurance now comes in “hybrid” policies that return money to your heirs even if you don’t need long-term care. Another plus: if you are older or have health problems, this insurance is easier to qualify for. Drawback: Hybrids are two to three times more expensive than traditional insurance.
- Shop early to get best rates – If you want insurance, start shopping while you are in your 50s or early 60s, before rates increase at a sharp rate (65 & older).
- Seek an independent agent – Look for an agent who sells policies with multiple companies and who can sell long-term care partnership policies – part of a national program that requires insurance professionals to take continuing education.
For more information:
Home- Long-Term Care Insurance: https://longtermcare.acl.gov/
Washington State Long Term Care Ombudsman Program: www.waombudsman.org/