Should You Purchase Long-Term Care Insurance?
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According to the U.S. Department of Health and Human Services, long-term care will be a reality for many retirees. A recent study found that today’s 65-year-olds have a 70 percent likelihood of needing long-term care at some point in their lives.1
Long-term care is extended assistance with basic daily functions such as bathing, mobility and eating. It is often provided in a facility but can also be administered in the home. As you may already know, long-term care can be costly. A recent Genworth study found that the average monthly cost of an extended living facility was $3,750. A full-time home health aide cost more than $4,000 per month.2
Many seniors need long-term care because of cognitive issues like Alzheimer’s or Parkinson’s. They may require care for years, and the costs can quickly add up. Fortunately, there are tools you can use to prevent long-term care expenses from depleting your savings.
One such tool is long-term care insurance. You pay premiums to an insurance company and, in return, it covers some or all of your long-term care expenses in the future. The amount of coverage depends on your specific policy.
Is long-term care insurance the right strategy for you? There’s no correct answer for everyone. It depends on your budget, needs and goals. Below are a few questions to ask yourself as you consider your long-term care options:
How’s your health?
Many retirees assume that if they are healthy, they have a reduced risk of needing long-term care in the future. That assumption may be wrong, however. Your good health could actually increase your likelihood of needing long-term care.
Retirees struggling with health issues in the early years of retirement may pass away before they ever need long-term care. However, those who are healthy could live to age 80, 90 or beyond.
If you reach those ages in retirement, you may struggle with things like mobility or bathing. You may have cognitive issues that make it unsafe for you to be alone for long periods of time. You may find it necessary to hire a part-time aide or even move into an independent living facility. Don’t assume that your good health today means you won’t need care in the future. It could mean the opposite.
Do you want to stay in your home?
Long-term care insurance is often referred to as “nursing home insurance.” There was a time when long-term care policies only covered care provided in a facility. However, today’s policies usually cover care provided in the home. Some even provide coverage for home modifications to accommodate wheelchairs, medical beds and other equipment. You may even be able to use your policy to reimburse a family member for care services.
You probably have a desire to stay in your own home as long as possible, even if doing so requires some assistance. Long-term care insurance can help you accomplish that goal. Without coverage, you may be forced to use Medicaid to pay for care, and Medicaid may require you to leave your home for a facility. Far from being so-called nursing home insurance, long-term care coverage can actually be a tool to help you stay in your home.
What’s your backup plan?
Perhaps the most important question is how you will pay for care if you don’t have long-term care insurance. You’ll need some other strategy. You could self-fund with your retirement assets, but that may be unsustainable over a long period of time.
You could count on children or other family members for support. However, long-term care is often a full-time responsibility. Consider whether your kids or other relatives have the time or ability to provide the level of care you may need.
Finally, you may plan on using Medicare and Medicaid to pay for your care. Unfortunately, Medicare usually doesn’t offer funding for long-term care. Medicaid will cover care, but only in a facility and only after you’ve depleted your own assets. Also, you may find that your options under Medicaid don’t meet your own expectations.
Ready to develop your long-term care strategy? Let’s talk about it. Contact us today at Ambrose Financial & Insurance Services. We can help you analyze your needs and create a plan. Let’s connect soon and start the conversation.
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.genworth.com/about-us/industry-expertise/cost-of-care.html
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17509 – 2018/3/26
