Wednesday Workshop – Long Term Care Benefits
1. What is Long Term Care Insurance and what does it cover?
Long term care refers to services tat individuals who are chronically ill or suffering from a disabling condition or cognitive impairment. These services are generally needed for an extended period of time and may not cure the person, but allow them to carry on daily living activities. Some of these conditions include: Alzheimer’s disease, Dementia, Parkinson’s disease, paralysis or disabling condition from an accident, etc.
In the case of a disabling accident, long term care insurance covers you if you are in need of 2 of the 6 defined ADL’s (Activities of Daily Living). These include feeding, toileting, transferring, bathing, continence, and dressing. Depending on the type of care needed, whether it is in a full-time nursing home, assisted living facility, or the increasingly more popular care at home services by a certified nurse, long term care insurance covers these types of expenses.
2. Why do I need Long Term Care insurance?
Most people decide and are basically legally required to have insurance on their car, house, rental, boat because those items are their most valuable assets. But the retirement nest-egg that people have been saving up for their whole life is at risk if there is a long term care event. Costs in Florida for nursing home coverage can run over $200/day. Assisted Living facilities average up to $3,000/month and home health care can be as much as $20/hour. Most people may not be aware, but Medicare, does not cover seriously affect someone’s retirement plan if an Long Term Care event occurs and lasts over the course of 1-5 years. In that sense, I like to refer to Long Term Care insurance as Retirement Insurance that preserves your assets and future as you enter the sunset years of their life.
In the past, as parents got older, their children would take care of them and move into their parents house or the parent(s) move into theirs. But with a fairly transient society now, where children have moved far distances away from their parents and both spouses of kids typically working, the chances of moving in with your children to take care of you is not that feasible anymore. AS families change, we need to explore more options if we need long term care.
3. What’s the likelihood I will ever use Long Term Care insurance if I had a policy?
With advances in medicine and healthcare in general, people are living longer and with that, so are the chances that needing long term care increases. In fact, the largest growing population segment in the country is 85 and older. In Florida, this especially holds true with so many services and attention given to the senior citizen based population. The American Society on Aging has projected that after age 65, Americans have more than a 70% chance of needing some form of long term care. By the way, with the baby boomer generation, approximately 10,000 people a day are turning 65.
These expenses are not covered by private health insurance or Medicare and once again, add that to the fact the Long Term Care costs continue to rise at a rapid pace and it’s easy to see that having insurance in place is needed to avoid damaging effects an otherwise sound financial security plan for retirement.
Ironically, even as the need for Long Term Care insurance has risen and continues to rise, many companies have dropped out of the Long Term Care insurance industry, recently. In fact, just over 10 years ago, there were over 20 companies that carried Long Term Care insurance, now there are about 10. Of those companies remaining, the top two (2), including Northwestern Mutual, account for roughly half of the sales in Long Term Care. With all of these changes in the industry and more expected in the future, it’s important to pay attention to the financial strength and reputation honoring claims of the companies you consider with respect to Long Term Care.
4. I’ve heard it’s very expensive, how affordable is Long Term Care insurance?
It can be very affordable if you plan at an early enough age, more affordable than most people think. For example, let’s pic John Smith who is planning to retire around the age of 65. In his planning stage, he decides to set himself up with Long Term Care insurance in his mid-fifties. He can get a mid-level benefit of $6,000/month coverage which results in a maximum allowable benefit of over $200,000 for less than $130/month. If John is married, and his wife Mary applies for Long Term Care insurance at the same time, they will both receive a 30% discount through Northwestern Mutual.
Because the government also sees long term care as a necessary and eventual event, there are also some great tax advantages to long term care ad benefits associated with Long Term Care insurance. Things like tax-free benefits, in some cases, tax deductions on premiums or use of an HSA account to pay premiums.
5. If someone wants to inquire further about this type of insurance, have a one-on-one consultation or ask other questions, what should they do?
They can reach out in one of two ways. They can either contact the Alzheimer’s Care Resource Center at (877) 760-9199 or they can call Jeff Lukosavich directly at (561) 846-2394. Finally, I hope this information was helpful and educational. Thanks again!