Long-term care insurance protects life savings and assets as we age. More than half of those over the age of sixty-five will need long-term care services 1, and these services are not covered by healthcare or Medicare. In fact, one in six people will spend over $100,000 2, whether it be for care in the home, in an assisted living facility, or in a nursing home, and the average total cost for people using such services is $266,000 3. In truth, the median cost of a room in a nursing home is $108,405 per year 4. As costs of care and inflation continue to increase, so will these figures.
Without long-term care insurance, you pay for the cost of care. Health insurance does not provide coverage for custodial care, Medicare offers a very limited benefit, and Medicaid requires most all assets be liquidated before it contributes. Depending upon your situation, a significant portion of savings and assets may need to be used. Making a long-term care insurance policy a part of estate planning can help preserve assets, ensuring they are available for other uses.
Long-Term Care Insurance Explained
Triggers
Long-term care insurance provides coverage when assistance is needed with at least two of six daily living activities including eating, dressing, bathing, continence, toileting, and transferring from bed to chair, or you are cognitively impaired. Such assistance must be needed for at least ninety days and a signed statement from a physician confirming the need is required.
Coverages
A long-term care insurance policy covers care provided in the home, assisted living or skilled nursing facility, adult day care, homemaker services, personal care, and respite care for family caregivers. The policy will even pay for a service to walk the dog or a driver to pick up groceries or prescriptions.
There are additional benefits of long-term care insurance. The costs paid to insurance companies may be tax deductible, so ask your accountant. In addition, most long-term care insurance policies are now Partnership Qualified (PQ) which protects against the need to spend down all savings and assets before qualifying for Medicaid. If care is needed for an extended period, long-term care insurance could be exhausted. If that happens, Medicaid will set aside the same amount that a PQ long-term care insurance policy paid. For example, if a PQ policy paid $300,000, the first $300,000 of savings and assets is not used when qualifying for Medicaid.
Caregivers and Care Coordination
Alleviating financial burden and preserving savings and assets are only a couple of the benefits of long-term care insurance. The physical, mental, and emotional toll sustained by caregivers is arguably greater than that experienced by many people receiving the care. A long-term care policy provides the help they need, thereby increasing the quality of life for both caregiver and care receiver.
However, where does the family turn when their loved one needs help? When a family member needs care, it is challenging to know how to get started. Many long-term care insurance companies also include a care coordinator as a resource. The care coordinator is experienced with facilities and caregivers in a particular area and can point the family in the right direction.
Costs
Long-term care insurance is one of the least understood but most needed personal insurance policies. Prices are reasonable and the benefits high, especially if purchased early. For example, the average cost for a sixty-year-old male for a policy with a $6,000 monthly benefit is only $2,000 per year. This is a fantastic deal. If that same person pays for ten years and then at the age of seventy needs care, it will take only three and a half months to earn back all the insurance costs paid up to that point. If purchased younger, prices are even lower. It is best to purchase this coverage early, locking in protection should health decline in the future. Once a claim is filed and benefits begin to flow, policy premiums no longer must be paid.
Inflation protection is one of the most valuable benefits in a long-term care insurance policy as it allows the benefits to increase as the cost of care goes up. Inflation protection continues to work even when a claim is open and premiums are not being paid.
Lastly, new insurance policies are available that combine life insurance and long-term care protection. These polices provide a benefit for long-term care before death and/or a life insurance benefit after death. Ask your insurance agent for details. Buying long-term care insurance is an important financial decision, and the National Association of Insurance Commissioners publishes a opens in a new windowShopper’s Guideopens PDF file to answer many questions about purchasing long-term care insurance. Most states require insurance agents to provide this guide to buyers to help decide if long-term care insurance is the right decision and if it would serve as an effective estate planning tool.
Questions on long-term care insurance? Contact your Bankers Insurance agent . We will help determine your risks and advise how to best cover them. Not a client of ours? Let us earn your business! Each client is assigned a personal insurance agent and provided their email address as well as a phone number that rings right on their desk.
Personal Insurance Quote
Your information is secure. We only use it to obtain quotes.
Prefer a quote by phone? Call (877) 606-1375.
Quote, Personal Insurance Are you a current client of Bankers Insurance? *
Δ
Personal Insurance Quote
