Long Term Care Insurance

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By Ramzan Magomedov

What’s long term care insurance? It’s living your last few years on this earth with dignity, in comfort and even style. It’s a family that’s not stressed out about the cost of home or nursing home that simply is there with love and support. It’s about avoiding becoming a warden of the state with no control over place or level of your care.

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There is a demographic bomb ready to go off which will strain the elder care and financial systems beyond the limits. There are currently 78 million baby boomers in the United States who will retire over the next two decades. So it may be even more important to be among those who actually have resources to pay for scarce care. In my experience, Long term care isn’t a subject of the typical conversation when planning for retirement; people just don’t like to think of themselves as old and helpless. The statistics and experience tell us that the need to plan for long term care is real.  The US Department of Health and Human Services estimates that 70% of people over the age of 65 will require some period of ongoing assistance at some point in their lives. So yes, a whole ¾ off us will need Long Term Care assistance. What’s being done to plan for it today-virtually nothing.  According to data, only 17% of those who need LTC help will need it for less than a year. The rest will need it much longer with full 20% needing it for 5 years or longer. People with dementia live on average 4.5 years, research found. People who get dementia prior to age 70, will live for a decade or longer with the disease.  Most dementia patients, especially in the advanced stages require around the clock care. The national average of the round the clock home care or a nursing home is more than $94,000 today. That number is expected to rise with inflation and with more and more demand on the finite resources in facilities and people to care for them.

So there’s no question that virtually all of us will need professional care at some point. So how do you pay for it?

First option is to take on that risk yourself and pay for the care out of pocket. How many people actually have the resources not only to live in retirement for decades but then pay for health and long term care costs for a number of years spending 50 to 100k a year after taxes?  If both husband and wife need care, the costs double. The truth of the matter is that the proportion of those who can afford all of that combined is very slim.

Second option: relying on family members to take care of you. The results of this are not good. Family members experience a huge impact on their lives, personal and work commitments, as well as their physical and emotional well-being.  It can disenfranchise parents and children, siblings and loved ones. It also opens a door for potential physical and financial abuse. Often times, family member are simply not able to care for the elderly. It’s just not possible for them given the demands of their lives, financial and emotional resources.

Third option-rely on Medicare. People often erroneously think that Medicare will cover their nursing home costs. That’s not true. Medicare only pays for short periods of care; typically only up to 100 days, after discharge from the hospital.

Fourth option is to rely on Medicaid. The only way to get Medicaid to pay for Long Term care needs is to be completely destitute. Medicaid generally covers only people with virtually no assets and very little income. Virtually every dollar of that income must be spent on care before Medicare kicks in.  The care must be received only in approved nursing homes. Patients may have very little control over where and how they are cared for. This is assuming that Medicaid will still be there for future patients for decades to come.  Given the sorry projections for the state and federal budgets , I am not sure it will even be there anywhere near the level it is at today.  Relying on Medicaid is taking an enormous chance with odds against you.

And fifth and final option: a private Long Term care insurance from a reputable company.  It’s by far the best option in my opinion. The policy can provide for a range of needs when a beneficiary is unable to perform two of the six activities of daily living regardless of age. A policy can be designed with the physical and financial needs of each person in mind. A private LTC policy can give you certainly that your LTC needs will be covered when time comes. Your family is not stressed out about your care; they can simply love you and care about you in your final years.

Long Term Care insurance policy can be costly and not everyone can afford it. That said, the benefit you are eligible for is much larger than the cost of insurance and it will be there when you need it the most. You owe it to yourself and your loved ones to get it in place for your future needs.

Final thought: The greatest need for Long Term Care insurance is among women. According to insurance companies’ data, 75% of long term care benefits paid by insurance companies are made on behalf of women. It makes sense: statistically women live longer than men. That also means that the man of the family most likely tapped into the family resources for long care needs first, potentially leaving very little for the spouse when she needs it.