With Americans living longer and baby boomers hitting retirement age, the demand for long-term care is expected to surge. Long-term care (LTC) insurance is one way to pay for long-term care. But according to a recent three-part series aired on CNBC’s Nightly Business Report, LTC insurance is not ideal for everyone.
Watch the CNBC videos:
Is LTC right for you? According to the Nightly Business Report “If you have less than $200,000 – $250,000 in total assets, the chances are very good that the premiums you would lay out for long-term care insurance would be cost prohibitive relative to the risk that you’re actually shielding your assets from, because you don’t have enough assets. On the other end of the spectrum, people with over $2 million in assets may want to consider self-insurance as part of their long-term care plan. Those in the middle should consider some form of long-term care plan, but it may or may not include insurance.”
If you are considering LTC insurance, first look at each policy very closely because each one is written differently. Also, look closely at the insurer’s claims payment history and whether they have been increasing premiums for existing policy holders.
Keep in mind how LTC insurance has failed some consumers:
- About half of all LTC policies lapsed before any benefits were paid; policy holders were unable or unwilling to continue paying their premiums.
- Of those people who bought insurance and later entered a nursing facility, about half never collected a dollar from their LTC policies.
- No benefits were ever paid to the many people who bought nursing facility coverage but instead received home care or entered a residential facility not covered by the insurance.
- When LTC benefits were paid, they were usually far below the actual cost of care.For many of the longest-term residents, benefits were used up before the nursing facility stay ended.
In all of these situations, LTC insurance failed to live up to its promise to help people avoid using up their savings or relying on Medicaid to pay for long-term care.
There is a 71 percent chance for people over the age of 65, that at some point in their lives, they will need long-term care services. That alone says that you have to have a contingency plan in place. With long-term care costs rising faster than inflation, insurers have been raising premiums sharply. As mentioned previously, if you have done your research and decide LTC insurance is right for you and your family, you should incorporate it as part of your long-term care plan, not as the only form of planning for long-term care. There are dozens of long-term care asset protection strategies other than long-term care insurance. For example, the Living Trust Plus™ Medicaid Asset Protection Trust is just one of many long-term care asset protection strategies.
If you have not done Long-Term Care Planning, Estate Planning or Incapacity Planning (or had your Planning documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, call The Fairfax Medicaid Asset Protection Law Firm of Evan H. Farr, P.C. at 703-691-1888 to make an appointment for a no-cost consultation.