Long term care insurance can be a difficult topic for many people. I want to explain some important points and help break down what you need to know.
In the United States, 6.3 million American have a high long term care need and it is estimated that by 2050, 15 million Americans will have a high long term care need.
An estimate by researchers projects that more than half of today’s 65 year olds will require long term care at some point, with an average total cost of $138,000. While many might need help for two years or less, one in seven will need care for five or more years. Although Medicare covers short stays in a nursing facility, Medicaid only comes into play after someone has depleted their assets. Long term care insurance can cover at least a portion of home, assisted living or nursing care and Consumer Reports shares that 22% of Americans have some type of long term care insurance.
Factors to take into account when considering if a long term care policy is right for you are: age, health, income, support system, the cost of premiums, savings and taxes. While it is not an easy decision, weighing all of these factors and talking with a financial professional will help you make an informed decision about whether or not to purchase long term care insurance.
There are three major options for long term care. I will give you the basic information for each and we are always here to answer your questions.
- Traditional Long Term Insurance. This type of policy ensures that no matter what type of care you need, the insurance will help cover the bill. In selecting a policy, you will be able to lock in a benefit for a certain number of years. The policy is triggered when a person can no longer perform two of six daily living activities or suffers from severe cognitive development. In order for the insurance to remain effective until a person needs the care, the policy premiums must be paid on time and not lapse, otherwise benefits and money paid will be forfeited.
- Short Term Care Insurance. This policy will give someone coverage for 360 days at a home or a facility. Some policies may allow you to roll over your benefits for longer than a year if you don’t use the full daily benefit rate. Premiums are lower than traditional long term insurance but may not cover certain types of care.
- Hybrid Life and Long-Term-Care. This policy combines life and long term care insurance in one. If someone needs care, they can use their benefit money to pay for it and if not, their beneficiaries will receive the death benefit. Premiums are fixed for life on these policies and the money is guaranteed as long as the premiums are paid on time and does not lapse.
Other options to look into are employer sponsored long term care policies, professional and service organization policies if you are a member, state sponsored plans and joint policies for two related adults or partners. These plans may help absorb some of the cost over an individual policy.
Long term care insurance should be weighed with careful consideration and should be discussed with family and a trusted professional. If you would like to meet with one of our advisors to find out more information and decide if long term care insurance is right for you, please call us at 215-256-7845 to schedule a complimentary appointment.
For further information on long term care, please visit https://longtermcare.acl.gov/.
For Pennsylvania specific information, please visit https://www.phca.org/
“Your Journey. Our Passion.”
Benz, Christine, 75 Must-Know Statistics of Long Term Care, Morningstar.com, August 31, 2017.
Stark, Ellen, Long-Term-Care Insurance Gets a Makeover, Consumer Reports, August 31, 2017.
Understanding Long Term Insurance, AARP.com, May 2016.