By: Chuck Gibson, President of Senior Insurance Services, Inc.
Long-term care, such as in-home health care or a nursing home facility, can be devastating financially and emotionally, not only for those who need care, but for their families as well. Most people think it is just the elderly who will end up needing long-term care, but nearly 41 percent of people using long-term care today are under the age of 65, according to the Federal Long Term Care Insurance Program. Current costs for this type of care run between $40,000 and $85,000 annually, depending on the type of care needed. These expenses are not covered by major medical plans or Medicare, as the majority of care needed is custodial care as opposed to skilled health care. Additionally, retirement plans, savings plans and the assets in living trusts are not protected against depletion to pay for your long-term care expenses.
Most people think it is just the elderly who will end up needing long-term care, but nearly 41 percent of people using long-term care today are under the age of 65.
If you have sufficient savings to self-insure the high costs of long-term care 20 or 30 years from now, when annual costs may triple, congratulations for planning ahead. For many of us, however, long-term care insurance may be a better alternative. Long-term care insurance is not “Nursing Home insurance.” The long-term care plans available today provide for a variety of care, including care in your home, adult day care, assisted living facility care, as well as care in nursing homes. The objective of a good long-term care plan is to help individuals stay as independent as possible while, at the same time, helping to relieve emotional and financial burdens.
There are, broadly speaking, three types of plans that can be used to pay for long-term care expenses.
Traditional plans use the expense reimbursement approach. These plans reimburse expenses incurred through agencies using trained and certified home caregivers, as well as care in licensed adult day care, assisted living and nursing home situations.
Another type of plan is the hybrid policy approach. Hybrid long-term care plans are essentially expense reimbursement models, but allow you to take part of the monthly benefit in cash to use as you wish. These plans provide more flexibility.
The third type of plan available is a life insurance or annuity policy with a long-term care rider built in.
Most people are unsure as to when or why they should consider a long-term care plan. Generally, it is best to consider purchasing a plan between the ages of 45 and 65 if you have $500,000 in assets, including your home, and a family income of $50,000 or more annually. The younger you are, the lower the premium, and the better chance you have of being accepted into a plan.
The best way to determine your need for long-term care insurance is to talk with an insurance professional who has the training and certification required to fill your needs in this most important area of estate planning.
About the Author: Chuck Gibson is the President of Senior Insurance Services, Inc., specializing in long-term care insurance and issues.
