How Will YOU Afford Long Term Care?

Odds are that you will need long term care before you die and long term care insurance is a great way to help cover those costs. Some studies show the probability of adults over the age of 65 needing a long term care stay at some point during their lives nearing 70%.  Most folks, including many of the clients we meet with in our elder law practice have no plan to minimize the burden on their families.  The truth is that people often avoid facing the reality of the long term care threat, avoid taking action while they still can and avoid discussing their long term care plan with their families.

How Can You Pay

There are three basic ways to pay for long term care in the United States. They are:

  1. Private Pay – This is paying for long term care medical costs out of your own pocket. The costs are high and keep increasing, so if this is your plan, you need to try to figure how much you need to have set aside to cover your potential costs.
  2. Medicaid – If your assets fall below $2,000 and your monthly income is less than $2,094, then you can qualify for the government funded long term care program known as Medicaid.
  3. Long Term Care Insurance – Long term care insurance is a type of insurance designed to cover the costs of long term care.

Long Term Care Costs

The odds of falling prey to needing long term care are staggering and the cost can be even more so.  A year in a Georgia Nursing Home averages more than $60,000.00 and promises to keep rising.  Many Americans hold the mistaken belief that Medicare and Medicare Supplemental Insurance will cover long term care.  At best, Medicare covers only part or all of the first 100 days of care.  Most long term care costs are paid out of your own pocket.  Once your assets have been spent down to the applicable poverty level ($2,000) you may qualify for Medicaid.

Long Term Care Insurance

Against this backdrop, long term care insurance has become one of the fastest growing insurance products in the country. Fortunately LTCI can be designed to fit almost any budget. Long term care insurance generally covers the cost of home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzehiemer’s facilities. Most LTCI policies share some common features you should know and should be looking for: 1.  Benefit Amount: How much will the policy pay? 2.  Benefit Triggers:  When will the policy pay benefits? 3.  Inflation Protection:  Will the purchasing power increase? 4.  Level of Care: Are Custodial and Intermediate Care covered, along with Skilled Nursing Care? Is Home Health Care covered?

Sometimes folks are concerned that if they don’t ever use the long term care benefits of their policy, they will have paid the premiums for nothing. While personally, I find this unlikely, there are new types of policies available that are esentially life insurance policies with the ability to use the benefits for long term care. This allows your family to receive a death benefit if you pass away having never used any of the long term care benefits. Additionally, some of these policies will allow you to withdraw the cash value of the policy to use for other things. These types of policies can be very flexible and are a welcome addition to the long term care insurance market.

Rising Premium Rates

One other factor to keep in mind as you consider long term care insurance is that the cost of premiums has been rising. If you have not already done so, you need to sit down with your financial professional now and review what your options are before it’s too late.

As with any form of insurance, the policy is only as good as the ability of the insurance company to pay your claim.  There have been several high profile exits from the long term care insurance market recently. Check out the financial strength and reputation of the insurance company and seek competent legal counsel to interpret the contractual provisions of any LTCI policy before you sign on the dotted line.


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