Long Term Care Insurance

According to the Department of Health and Human Services, more than 70% people over the age of 65 will need some form of long-term care.  Planning for this possibility is something that you can discuss with your Wealth Alliance Advisor.

UNDERSTANDING LONG-TERM CARE

Tip: Won’t Medicare Pay for It? After a three–day hospital stay, Medicare will cover the first 20 days in a skilled nursing care facility completely. For the next 80 days, it will cover all but $157.50 per day. And after 100 days, it won’t cover anything.
Source: Centers for Medicare and Medicaid Services, 2015

Addressing the potential threat of long-term care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy.

The U.S. Department of Health and Human Services estimates that 70% of people over age 65 can expect to need long-term care services at some point in their lives.1 So understanding the various types of long-term care services—and what those services may cost—is critical as you consider your retirement approach.

What Is Long-Term Care?

Long-term care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability—most commonly associated with aging.

Long-term care can include everything from assistance with activities of daily living—help dressing, bathing, using the bathroom, or even driving to the store—to more intensive therapeutic and medical care requiring the services of skilled medical personnel.

Long-term care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And long-term care is not exclusively for the elderly; it is possible to need long-term care at any age.

How Much Does Long-Term Care Cost?

Fast Fact: Getting Care Now. Some 1.4 million adults live in skilled nursing facilities. Another 4.8 million remain in their own homes but get help with personal care from other people.
Sources: CDC, 2015. (Data from 2013 report is the latest available.)

Long–term care costs vary state–by–state, and region–by–region. The national average for care in a skilled care facility (single occupancy in a nursing home) is $91,250 a year. The national average for care in an assisted living center (single occupancy) is $43,200 a year. Home health aides cost a median $20 per hour, but that rate may increase when a licensed nurse is required.2

What Are the Payment Options?

Often, long-term care is provided by family and friends. Providing care can be a burden, however, and the need for assistance tends to increase with age.4

Individuals who would rather not burden their family and friends have two main options for covering the cost of long-term care: they can choose to self-insure or they can purchase long-term care insurance.

Many self-insure by default—simply because they haven’t made other arrangements. Those who self-insure may depend on personal savings and investments to fund any long-term care needs. The other approach is to consider purchasing long-term care insurance, which can cover all levels of care, from skilled care to custodial care to in-home assistance.

When it comes to addressing your long-term care needs, many look to select a strategy that may help them protect assets, preserve dignity, and maintain independence. If those concepts are important to you, consider your approach for long-term care.

The Best-Laid Plans

Default Choice or Best Approach?

Source: U.S. News and World Report, November 13, 2015

1. U.S. Department of Health and Human Services, 2015
2. Genworth 2015 Cost of Care Survey

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2017 FMG Suite.

LONG-TERM-CARE PROTECTION STRATEGIES


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WHAT TO LOOK FOR IN A LONG-TERM CARE POLICY

Tip: How Old Are You? Age can makes a difference in the cost of a long-term care policy. Generally, the older you are when you purchase a policy, the higher you can expect the premiums to be.
Source: U.S. Department of Health and Human Services, 2015

Long-term care insurance is one of the most complex types of insurance you may consider purchasing. Here’s a list of 10 questions to ask that may help you better understand the costs and benefits.

What types of facilities are covered? Long-term care policies can cover:

  • Nursing home care
  • Home health care
  • Respite care
  • Hospice care
  • Personal care in your home
  • Assisted living facilities
  • Adult day-care centers
  • Other community facilities

Many long-term care policies cover some combination of these. Be sure to understand what facilities are included when you’re considering a policy.

What is the daily, weekly, monthly benefit amount? Policies normally pay benefits by the day, week, or month. You may want to evaluate what long-term care facilities in your area are charging before committing to a policy.

What is the maximum benefit amount? Many policies limit the total benefit they’ll pay over the life of the contract. Some state this limit in years, others in total dollar amount. Be sure to address this question.

What is the elimination period? Benefits don’t necessarily start when you enter a nursing home. Most have an elimination period—a period during which the insured is responsible for the cost of care. In many policies, elimination periods can range from zero to 100 days after nursing home entry or disability.

Does the policy offer inflation protection? Adding inflation protection to a policy may increase its cost, but it could be important if long-term care services increase in price.

How are benefits triggered? Insurance companies use specific criteria to trigger benefits. The most common is inability to do a certain number of the activities of daily living without assistance. The six activities of daily life used by most insurance companies are:

  • Bathing
  • Continence
  • Dressing
  • Eating
  • Toileting
  • Transferring

Many policies also have benefits for Alzheimer’s disease or other forms of dementia.

Fast Fact: Costly Care. The national average cost of care in a skilled nursing facility is $91,250 a year. Care in an assisted living center averages $43,200 a year.
Source: Genworth 2015 Cost of Care Survey

Is the policy tax qualified? Certain long-term care policies can offer federal income tax benefits. Generally, premiums paid for these policies can be included with other uncompensated medical expenses for deduction from income if they exceed 7½% of adjusted gross income. And benefits received generally will not be counted as income.1

How strong is the insurance company? There are several companies that analyze the financial strength of insurance companies. The ratings can show you how industry watchers view various insurance companies.

What other policy options are available? There are a number of other long-term care policy options you may want to consider. Waiver of premium allows premiums to be discontinued once benefits are triggered. Third-party notice requires the insurance company to notify a third party whenever premiums have been missed — so the insured can have a child or trusted advisor make certain premiums are paid.

There are many factors to consider when reviewing long-term care programs. The best policy for you may depend on a variety of factors, including your unique circumstances and financial goals.

Touch of Grey

In 1900, the average person lived to age 47. The average life expectancy stood at 78.8 years in 2014, the most recent figures available.

Touch of Grey

Source: Centers for Disease Control and Prevention, 2015

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2017 FMG Suite.