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Cape Cod Estate Planning Blog

Tuesday, March 20, 2018

Why You Should Consider Long-Term Care Insurance!

 

Long-term care insurance is costly, but health care costs for seniors who need long-term care could easily undo decades of retirement planning without it. Here’s what you need to know about the costs and benefits of long-term care insurance.

The Chicago Tribune’s recent article, “Thinking of buying long-term care insurance? Consider these costs,” reports that a 2015 cost of care survey from insurance company Genworth Financial estimated the national median cost of care for a home health aide to be almost $46,000 annually, while the national median cost for a private nursing room home is more than $91,000 annually. In the Boston area specifically, private nursing home costs are approaching $180,000 annually.

These numbers are, while terrifying to consider when thinking about the detriment they could pose to your savings, pushing some people to consider long-term care insurance to pay for these bills. However, if you’re considering purchasing this insurance, note it is costly, very complex, and not everyone will qualify.

It is money well spent to talk to an elder law attorney to see if these policies make financial sense. They can review a person’s assets and any other coverage they may have from Medicare, Medicaid and other state and federal programs designed to support the sick and elderly.

Since policies are designed so buyers purchase a set amount of benefits for a certain time period, those who don’t have many assets, may find a long-term care insurance policy to be too costly. These policies are less expensive for younger and healthier people since their time horizon is presumed to be longer.

Policy premiums can go up dramatically as people age.  This is why someone purchasing a policy in their 40s, will spend less than someone in their 50s or 60s. With rising premiums, buyers must consider if they’ll have future assets to cover premium increases. Some policies have optional non-forfeiture riders that will protect what was already paid, if a policyholder can no longer afford the premiums.

Long-term care insurance policies require medical underwriting, and pre-existing illnesses will increase the cost. There are also many situations where a person will not be eligible for coverage, including cognitive impairments such as dementia, Parkinson’s, and Alzheimer’s.

Once the funds are exhausted, the long-term care policy ends. How long it lasts will depend on the cost of care in your area and the level of care needed. Once the policy ends, usually after three or four years, other assets will be needed to pay for care. In many instances, you are deemed eligible for benefits (usually after a waiting period) when you need assistance with two or more activities of daily living such as getting dressed or bathing. Each policy is different, so you’ll want to review them with an estate planning or elder care attorney.

Deciding whether long-term care insurance is right for you or not is a manifold process. Although Case Estate & Elder Law does not sell insurance, we can help you navigate the multiple policies and avenues to find the best option for you, and discuss planning options to protect assets from the nursing home. Visit our website today and schedule a consultation!

 

 Reference: Chicago Tribune (November 6, 2017) “Thinking of buying long-term care insurance? Consider these costs”





Case Estate & Elder Law, PC assists clients in Barnstable County, Dukes County, Nantucket County, and Plymouth County MA; areas include but are not limited to Cape Cod, Martha's Vineyard, Nantucket, and Plymouth.



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