Posted by admin on March 8, 2018
As a long-term care specialist, I made a decision to make my career focus on educating people about the impact of a long-term care event on families, their finances and their health and emotional well-being. Proper and careful long-term care planning allows peace of mind, financial security and lessens the burden that caregiving places on families and loved ones.
In meeting with clients I have found that there is a disconnect between the perceptions and reality of long-term care insurance planning.
Yes, there is 'fake news' about long-term care insurance.
The need for long-term care has increased as longevity has increased, due to advancements in medicine and technology. Simply put, we are living longer and 70% of Americans turning age 65 will need some form of long-term care in their lifetime, and by 2050 it is projected that 27 million Americans will need LTC. With longevity comes the reality that a longer life increases the likelihood of multiple chronic health conditions and needing assistance with the everyday activities of daily living that many of us take for granted.
Often this myth is followed by “what if I never use it?” Sure, a long-term care insurance policy can be expensive; however, there are many ways to design a policy that is affordable. A thorough conversation about each person’s individual story will help us craft a policy that fits that person’s budget. Would you rather pay, on average, $3,000 a year for a policy or $5,000 a month for the costs of long-term care? Peace of mind is an intangible benefit of having a long-term care insurance plan whether or not you use it. And if designed properly, a plan can deliver a benefit whether or not long-term care is used.
This is not the case, as Medicare only covers a limited amount of long-term care services, most often for short-term skilled nursing home care after a hospital stay and is capped at a maximum of 100 days. Many also assume that if they cannot afford long-term care that another government program, Medicaid, will cover them. Medicaid is essentially welfare assistance and requires that one is impoverished. It is only available to those that meet federal poverty guidelines and has strict lookback periods. Further, while it does cover nursing home care, it provides only limited coverage for home health care in certain states.
Sure, some are able to “self-insure” but many people do not have a lump sum set aside just for a long-term care event. Many people have assets geared towards living an extended period in retirement and some of these assets are tied up in retirement plans that are not easily liquidated. Factor in the risks of a market downturn in real estate or the stock market when you need care, and you could be left short of the funds needed for a long-term care event. One other thing I always mention is peace of mind. Even if you had money to pay for long-term care, why add the risk of uncertainty? A well designed long-term care policy will safeguard these savings and ease the burdens of long-term care on family. Insurance at its essence is designed to transfer risk to the insurance company.
This is one I can't understand. I am sure some people are fortunate to never have witnessed a family member or friend deal with a long-term care event, but those are the minority. The statistics clearly show that at some point in our lives, most of us will require long-term care. Why place the burden of care on a loved one? Proper planning can allow your loved ones to be companions rather than caregivers and allow you to pass on a legacy that can otherwise be diminished by a long-term care event. From the moment a diagnosis or accident occurs, personal resources can be depleted in a matter of weeks.
Maybe. Some can. And Caregiving can be noble work, but in reality, relying on family to deliver comprehensive care is not realistic. What happens if your children live far away? They will likely have family & careers. Often, a spouse is not physically able to care for the ill spouse or may themselves be in need of care. A MetLife study of Working Caregivers found that unpaid family caregiving resulted in lost wages, decreased employability, increased health care costs to the caregiver as caregiving is physically and emotionally taxing, lost savings and retirement assets, and reduced productivity at work.
