Why should you consider long term care insurance? What are your options to pay for this?
Long term care is when you need services to help you through your activities of daily living. Things today we take for granted. You will also see this called custodial care. Long term care/custodial care is:
- getting on and off the toilet
- maintaining bowel and bladder control
- moving from bed to chair using your upper body strength
- help with severe dementia or Alzheimer's disease
Most folks think this will be covered by their medical insurance or Medicare, but those insurances are for “medical care,” care that is restorative. They are not meant to pay for basic daily living needs/custodial care. The cost associated with long term care can be shocking. A person assisting in your home with eating, bathing and dressing you, also assisting with light housework, meal preparations and possibly driving you to and from doctors appointments can cost $21.00- $25.00 per hour +.
Today's Home Care
Home Care, today in Southern California, can be $4000 per month or more. The cost of assisted living facilities is $4000-$6000 per month for board and care, if you need extras, the charge will be added for the services, and Nursing Homes run $8000 per month and up if it's a private room. All of these costs are for one person. AND, this is the cost today, what will this cost be 10-15 or 20 years from now?
What is the real risk of this happening to you? The risk of your home burning to the ground is 1 in 1200, the risk of an automobile accident and the auto being totaled is 1 in 240, and a hospital stay of 3+ days is 1 in 15...all of these you have insured to protect your nest egg. However, the one risk that is the greatest risk we all face if we live a long life, is an extended health care event. The risk for folks who are 65+ years old is 1 in 4. I don’t like statistics, but this is hard to ignore. This is the greatest risk we face.
What is your plan if an extended care event were to happen to you? Will you live with your children or will they move into your home to care for you? Do they have families, a job? How will your care change their lives? If your care were to last 2 years due to cancer or a heart condition or 10 years due to a stroke or Alzheimer's, what plans have you put into place to protect the people who care about you?
Whether you are wealthy or not, paying a reasonable insurance premium to transfer one of the greatest financial threats you face can be a smart move towards protecting your income and assets as well as the people in your life who care about you.
How Will You Pay for Care as You Age?
Consider your financial priorities, how much of the cost would you be willing and able to cover and for how long? Even a small plan of insurance protection will be of great help to you and the people who love you, and it will help preserve your own personal assets.
What is your plan for these hard earned assets? To pay for your personal care? Or leave to grandchildren or your favorite charity?
You may be able to pay for this all on your own. Taking that risk is totally up to you. You could depend on the government to pay for your care, but this is only after you deplete your personal assets. Government care in California is MediCal, or Medicaid in all other states. Or you can insure the risk with a highly stable and financially sound insurance company.
How to Insure Against the Rising Costs of Care
There are two ways to insure this risk, traditional insurance and hybrid/linked benefit plans. Both have their advantages.
Traditional insurance will have a lower premium. However, premiums could increase at some point and time in the future. You pay these premiums until you have a claim or pass away. This plan pays benefits when you need care with 2 out of the 6 activities of daily living/custodial care. They also cover a severe cognitive impairment. These plans have a set number of years they will pay out the benefits. All of the benefits paid to you will be income tax-free. This is a very effective mode of insuring this risk.
Hybrid/linked benefit plans have grown in popularity in the last few years due to the fact they hold more guarantees. These guarantees add bit higher premium charge. Companies offering hybrid/linked plans guarantee the rates never increase.
How Do the Premiums Work?
You can pay the premiums in many ways, one single payment, 10 years/20 years, or over your lifetime. There are also plans that you can fund with your retirement dollars (if you are retired and over age 59 1/2), all come with a guarantee that they will never increase your premiums.
These plans also have a money back guarantee if you change your mind or if you die and never use it a portion of premiums paid, less any claims, will go back to your estate income tax-free. You trigger the claim benefits the same way as traditional plans, and all benefits paid while you are on claim are income tax free.
There are many moving parts finding the right long term care insurance for you. Consider these money saving tips on long term care.
A Big, Overlooked Perk of Long Term Care
Who will help you and your family at the time of a claim? One helpful benefit of owning a long term care insurance plan is the Care Coordinator or Care Concierge.
This is a service free of charge to policyholders. These experts are trained to offer support and guidance throughout your claims process. They will assist you or your family members in getting the claim open and benefits running smoothly and efficiently.
Conclusions on Long Term Care
Medicaid will help you out if you have next to nothing. But this puts many families in an awkward position if one spouse needs assistance, but the other does not.
Long term care can help you stay in your home, whereas Medicaid (or MediCal) does not give you that option. It allows you to preserve your assets so you don't have to burn through your retirement funds faster than expected or intentionally deplete them to qualify for government assistance.
Most people will need some living assistance in the form of extra help, whether that's in-home care, and assisted living facility or a nursing home. By choosing to protect your future through long term care, you reserve your rights to make your own choices about your future.
How Abrams Insurance Solutions Can Help
The next step is to complete an application. We will do this together. Once you have signed the documents, it will be submitted for medical underwriting review. The entire process can take from four to six weeks.
Our long term care specialist has enjoyed Long Term Care Planning for over 21 years. She holds firm to her conviction that helping people find sensible and affordable plans is her greatest accomplishment.
It is our specialist's goal to educate you about the risk you face and the cost associated with care-giving so that you can make a sound decision. Her passion and drive come from personal experiences. If after you talk you decide to insure this risk on your own, with your own assets, we will respect your decision.
Give us a call today at 858-703-6178 to see what your options are to protect your future. We are happy to answer any questions and there is never any obligation to buy.