Roughly 60% of those turning 65 can anticipate using some form of long-term care in their lives, according to the U.S. Health and Human Services Department. Those individuals may be faced with a nursing home, assisted living, or in-home care. The costs associated with these types of care make elder law planning extremely important. This is one reason individuals should consider the possibility of long-term care insurance.
CNBC’s recent article, “Not having long-term care insurance can be ‘the single biggest devastator’ of your financial plan,” reports that over 8 million Americans have long-term care insurance. However, the cost of that insurance is rising. The increase is due to several factors, including the fact that companies under priced their policies for years and misjudged how many would drop coverage. Because of those rising premiums, some individuals may choose self-insurance. That means saving a pool of money to earmark for long-term care. Coverage is also available through Medicaid, which has eligibility requirements. Despite these increases, when planning, one should consider purchasing some form of coverage. This is because not being insured can be the biggest devastator of a financial plan.
The rule of thumb has been to buy LTC coverage at age 55. However, it really depends on your situation. The big unknown is health, and the odds of being able to qualify for coverage at age 60, compared to age 30 or 40, is vastly different.
A traditional LTC policy will cover the costs of care for a certain period of time, generally up to six years. The amount of coverage is based on the average cost of care for your location. Most insurers offer it in the form of a monthly benefit, and possibly with some inflation protection. There’s also a hybrid policy that covers long-term care costs, but becomes life insurance paid to heirs, if it’s not used. Of the 350,000 Americans who purchased long-term care protection in 2018, 85% chose the hybrid coverage. It’s also called combo or linked-benefit. The big difference between a traditional LTC policy and the hybrid policy is you’ll pay more for the hybrid policy.
The attorneys at Michael T. Huguelet, P.C. would be happy to discuss your options for long term care planning and the benefits of long term care insurance so you have piece of mind that your assets are preserved and left to those who mean the most to you. If you are looking for long-term care planning in Orland Park, Illinois or the surrounding suburbs of Chicago, please give us a call.
Reference: CNBC (October 14, 2019) “Not having long-term care insurance can be ‘the single biggest devastator’ of your financial plan”