Long Term Care Insurance
Long Term Care Planning
What are the risks and costs of long term care?
Risks and costs of needing long term care.
If you’re 65 today in the United States, there’s a 70% chance you’re going to need some kind of long-term care during your life, according to the U.S. Department of Health and Human Services.
And that care — whether it’s at your home, an adult day care center, a nursing home or an assisted-living facility — is expensive.
Nursing home in NYC or Long Island; $18.000 per month, or $216,000 per year.
Staying home is cheaper, but not cheap. In 2015, he average daily cost for a home health aide in New York was $205. That would come to $75,000 per year.
And those costs are increasing.
Are there Problems with Relying on Medicare and Medicaid?
I am Medicare Certified, I know Medicare, and I can help you enroll in the right Medicare Insurance Plan. Medicare will help pay for a short stay in a skilled nursing facility, hospice care or home health care under certain limited medical conditions, but that’s it. It will not pay for long term care.
With Medicaid, you need to qualify. There are asset and income tests that may require you to divest yourself of assets to qualify in the first place. If you do qualify, you lose a lot of choice about the type of care you’re going to get. And your medical costs will chase you. If you have equity in a home, your estate will get those bills after you die.
Relying on Medicaid to cover your care can be financially devastating, especially if you have a surviving spouse, who will be left with greatly depleted resources.
What is Traditional Long Term Care Insurance?
With traditional long-term care insurance, you pay a set premium that typically goes up as you age, until it hits a specified maximum. To receive benefits, the buyer must need assistance with at least two of six “activities of daily living”: bathing, dressing, continence, eating, toileting and “transferring,” such as moving from a wheelchair to a bed. Like most forms of insurance, if you don’t use the benefit, you lose it; the insurance company keeps your money. And long-term care insurance is both expensive (costs have spiked over the years) and difficult to find. Fewer and fewer insurers are issuing policies, and in some states, it is simply unavailable.
Other Insurance possibilities
The insurance industry is offering alternatives, including “living benefits” products that combine life insurance with long-term care. They allow you to accelerate your policy’s benefits to get much-needed money if you suffer a terminal, chronic or critical illness. If you don’t need care, the money goes to your heirs or your estate when you die via the life insurance death benefit.
A similar solution is asset-based long-term care insurance. Instead of paying premiums, you deposit a lump sum of money with the insurance company. If at some point you require care, the insurer will pay you benefits based on how much you deposited and how old you were when you purchased the policy, the earlier you start the more benefits you get for your dollar. If you ever decide you don’t want the policy, you have options for getting your money back. And if you die without needing care, there is still a death benefit for your heirs.
There are also annuities with long-term care benefits.
Some work much like the asset-based life insurance policies: You put in a lump-sum deposit and you’ll receive some interest on that. Then, if you need long-term care, a multiplier is applied to the cash you put in. For example, if you put in $100,000 and you need long-term care, that amount increases to $300,000 to put toward long term care expenses.
Another annuity option offers an income rider. You put in a certain amount of money and the company will, depending on your age and when you want to start taking distributions, guarantee a certain rate of income. But if you need long-term care, that income is doubled. So, if you had an annuity that guaranteed $40,000 annually in income, it would double to $80,000. It may not cover all your expenses, but it certainly will help.
Long-term care planning is something a lot of people ignore. They hope they won’t get sick, or that they won’t need it. Unfortunately, the statistics say that the majority of people will need some sort of care assistance, and planning for that is important.
For help with long term care planning, call me at 516 228 1050