This page is designed to walk you through a 10,000 ft overview of long-term care planning. It’s important that you understand your options first so that when you’re ready for us to design your custom plan, you have a foundation of knowledge on how long-term care insurance works. You can learn more about our process HERE.
Long-term care insurance provides a tax-free stream of income to help pay for care costs that are not generally covered by medical insurance, Medicare, or Medicaid.
You should look into long-term care planning, if you want to…
Traditionally long-term care planning has been aimed at the middle class who are at risk of losing their savings from an extended health care situation. Due to new programs and recent changes at the state and federal level, long-term care is benefiting a wider range of individuals from smaller estates up to the wealthy who have traditionally self-insured.
New programs have also made it easier for older adults to qualify for plans, and some of the newer plans also accept people who may have been turned down in the past due to medical conditions. Today many plans accept people up to age 80 and some alternative plans will go up to age 90.
According to the US Department of Health and Human Services, once you reach the age of 65, there is a 70% chance you will use some form of long-term care during your life. In fact, long-term care is the largest single risk you face during your retirement years. Not only does it have the potential to be a devastating financial burden, it can also put a physical and emotional burden on the people you care about most.
Cost for care can range from $25 per hour for an in-home health care worker to over $20,000 per month for a special memory or Alzheimer’s clinic. Because of the growing population of Baby Boomers, long-term care costs are expected to outpace inflation for the foreseeable future. (Between now and 2032, nearly 10,000 people a day will turn 65.)
Many people believe they are going to live a fulfilling life and then simply go to sleep and take their last breath at the end. The reality for most people is quite different.
Medical advances are helping us live longer. Many of us will face years of declining ability simply because we are getting older. This makes the risk of needing assistance from others grow with every new birthday we celebrate. Currently, there are over 12 million adults living in long-term care situations, and that number is expected to more than double by the year 2050.
You can’t stop the aging process, but you can mitigate the consequences that come with a long-term care situation by making the effort to put a plan in place today.
All plans require some type of medical underwriting, meaning the insurance company is looking at your overall health before they will agree to insure you. Health is a key factor in qualifying; age is also a factor. The younger you are when you put your plan in place, the more coverage you will get for the same investment. Younger applicants also have many more plans and options to choose from. There is no advantage in waiting.
Nationally, one in three people who apply for traditional long-term care insurance are turned down. Many people are one doctor visit away from becoming ineligible for long-term care insurance coverage, and once you are turned down, it can be difficult to find a company who will accept your application.
Medical care is for shorter-term, acute care: it has the goal of curing us of an illness or fixing us and getting us back to normal. The goal of long-term care is not to cure an illness but to allow us to attain and maintain an optimal level of functioning.
Long-term care encompasses a wide array of medical, social, personal, and specialized housing services needed by individuals who have lost some capacity for self care.
Individuals who require long-term care are generally not sick in the traditional medical sense. They do, however, require assistance to perform the activities of daily living, or they require supervision due to cognitive impairment.
There are only two ways to pay for the additional costs that come with a long-term care situation.
Long-term care is triggered in one of two ways:
Think of long-term care insurance as a bucket of money that you can access to pay for care when needed. Most policies will reimburse you up to a set rate based on either a daily amount or a monthly amount. Any unspent money remains in the policy for future use.
Many policies describe a term such as three years of coverage. However, that simply describes the minimum amount of time the policy will last if you are pulling out the maximum amount of money from your policy.
There are two main types of long-term care plans: traditional or asset-based (also known as hybrid or linked-benefits). Traditional plans can be strengthened through a state partnership program. Learn more about your options by clicking the links below.
