Discussing insurance, any type of insurance, can become contentious. A conversation, as we age, on what coverages we need or don’t need often seems more centered in politics than coverage and affordability. Long term care insurance is no different. Tied into what is and isn’t “health care”, whether certain coverage is necessary, if you should buy, when you should buy and then, what to buy are difficult topics. Long term care insurance is a topic no one wants to think about at 50, but at 85, there may not be any viable options to discuss.
Long term care insurance, like seemingly everything involved with health care and insurances, is steeped in abbreviations and coverage explanations. But, like all plans it comes down to a simple question: how much for how much? Put simply, long term care insurance is about providing for payments to help with what professional care providers call “Activities of Daily Living” or ADL’s. In layman’s language those daily living activities refer to bathing, dressing, eating, personal care (like hair and toilet care), mobility and transfer issues.
Shopping for insurance
“It is really important to have a wide selection of options when looking for LTC insurance, rather than one product,” claims Ronda Cobb, BSME, a Licensed Long Term Care Insurance Independent Agent. “LTC insurance is incredibly dependent on your current state of health. It is important to be able to cast a wide net when looking for a product that fits both your needs and you financial resources. Statistically people think that LTC insurance costs twice what it actually costs. Investigate your options before purchasing.”
Cobb, with a broad range of experience in financial, retirement, and individual health care planning, is the financial expert on the Dr. Sam Show (WLQR 100.7 FM) and hosts her own show on sobradionetwork.com. “Of course we don’t like to think about long term care. None of us want to think about in home care, assisted or skilled nursing care. However, the truth is that 70% of people over 70 will need long term care of some kind. This type of care is only minimally covered by Medicare. The rest must be covered out of pocket.”
The pro’s, why invest in LTC insurance
The most important reason to invest in LTC insurance is simply financial. This year according to Ohio.gov and longtermcare.gov, the average cost to stay in a skilled nursing facility (in Ohio) in a semi private room is $5000 per month. In home health care, on average, costs $21 per hour while adult day care runs an average of $67 per day.
“It is hard to talk to people in their early 50s about long term care insurance,” says Carter Laytart, a Certified Long Term Care Agent with New York Life. “They best way to start thinking about the problem is to use your own experience. Everyone has either been through the long term or rehab process with a family member or knows someone who has. Many active adults who purchase insurance may have already been through the process. Regardless, between friends and family you can get a real sense for how expensive and problematic the process can be on your kids or spouse.”
The first, most glaring benefit, is asset retention. “Ohio and Michigan are partnership states,” explains Cobb. “Which means that during a Medicaid spend down you get to retain three times more assets than you would if you weren’t insured.” Being able to retain more assets can mean a great deal to surviving spouses and/or estate beneficiaries.
Laytart agrees. “Like all insurances, this is about about protection, both assets and choice. It certainly allows the insured the ability to retain more of their personal assets. If the right policy is constructed, a person may never face a Medicaid spend down or even much of a dent in their financial estate. It also gives a measure of time and choice. Time for making vital decisions about the long term needs of the insured. Choice when it comes to both where and how that care is delivered.”
That matter of choice is crucial. “By being insured,” explains Cobb, “you retain much more control over where you receive your long term care. This can include geographics (such as area of town, city, or even state), type of facility, and proximity to your family or support network. If you rely on Medicaid those types of choices narrow significantly”
The cons, is it really worth it?
There is no question that LTC insurance is a financial investment and cost is directly related to both your age and your general health. Many find the cost too difficult to carve out of a monthly budget. Although costs vary and, according to Cobb, are modulating downward, it is still a fiscal commitment. Above all you need to buy early in the retirement preparation cycle, something that many people don’t view as a priority.
“There are ways to mitigate the cost,” explains Laytart. “Policies can be tailored to individual needs, including inflation riders and spousal discounts. Some companies may offer a dividend on the policy. This is a function of time and may reduce the premium payment in the later stages of the policy.”
Second, LTC insurance cannot be allowed to lapse. If you drop out for any reason you have to re qualify for the insurance, which for many becomes more difficult and expensive. Third, LTC policies have caps and/or maximums for care payments either per year or lifetime. Many people find those types of limitations distasteful.
Above all, Laytart recommends a broad view of your retirement and care needs. “This is all about legacy planning. By having LTC insurance you are taking active steps toward protecting what you leave for your spouse or family. You can also ensure that, if your family chooses to care for you at home, they can afford the support they need for that style of care, including in-home medical and general help. This is a decision about choosing how and when you use your financial assets while, potentially, protecting estates in the long term. LTC insurance is one option in a broad arsenal of financial instruments that can build a secure retirement picture.”
Contact Carter Laytart at
New York Life Insurance Company
1684 Woodlands Dr, Ste 100, Maumee, OH