Long-Term Care Insurance for Complete Protection
Not To Interrupt The Party…
There’s so much good news bouncing around these days and so many reasons to feel completely carefree that I thought it might be a great time to bring up a rather sobering topic: getting old.
(You’re welcome.)
See, there’s good news and bad news about growing old in the United States here in the 21st century. The good news is, far more of us are going to live longer than our parents’ generation, and a decade or more longer than their parents did. The bad news is, far more of us are living longer than our parents’ generation, and… you get the idea.
What’s wrong with living longer?
Nothing in-and-of itself. Yay for being alive! It’s just that it’s also kind of expensive to be alive, as you’ve probably noticed already. And the older we get, the more expensive it tends to be. Complicating that equation is that historically, we’re not very good at thinking about getting older.
American corporations spend millions each year convincing us they can help slow the “aging process” (whatever that means), or at least help us not look like we’ve survived so long and learned so much. Anyone you see over the age of about 50 in TV commercials is rock-climbing or canoeing or playing with grandchildren and puppies before fruit and fish-shopping together. Honestly, it’s completely surreal.
I’m not saying your life is over when you get your first gray hair – I have plenty of them and I still get around with minimal grunting and complaining. But my father couldn’t figure out the microwave half the time when he hit his mid-70s; bungee-jumping just wasn’t on our “To Do” list at that point.
What he needed (and what many of us will need eventually, often sooner than we like to think about) was resources. Support. Caregivers. To stay in his own home as long as possible and to be somewhere halfway decent and comfortable when that was no longer feasible.
Like I said, it’s sobering. I get it. Other than actually dying (not to be a complete downer, but that’s coming eventually as well), aging is perhaps the thing we like thinking about least. (Well, that or the pros and cons of the Electoral College. There’s no insurance for sorting through that one, however.)
What Is Long-Term Care Insurance?
I’ve written a bit before about insurance terms you need to know. There’s one that didn’t make that list which probably should have: “long-term care insurance,” also known as “LTC insurance.” So, what is it?
Most insurance is designed to help you get through specific, hopefully short-term, events. If you have a fender-bender, your vehicle insurance may help pay for repairs. If you develop a harmful medical condition, your health insurance hopefully helps offset the costs and time lost at work as a result. If your dog gets loose and eats the neighbor, your homeowner’s policy can buy you a new one.
Long-term care insurance, as the name implies, works a little differently. It’s designed to cover long-term supports and services, like home nursing visits, ongoing medical equipment needs, or an extended stay in a managed care facility.
It rarely covers everything, but long-term care insurance can supplement your savings, retirement, or Medicare, sufficiently to offer you relative security and comfort in your golden years. It may be as simple as having someone coming to your home to help you with cooking, bathing, or other self-care.
It can help offset the expenses associated with major ailments that sometimes come with age, from Alzheimer’s to the classic broken hip. And if you end up deciding to enter a long-term care facility, LTC coverage can help pay for that as well. Which is far more likely than it was a generation or two ago.
Did I mention the thing where we’re getting older and older these days? I did? OK, good. Because we are. It’s wonderful and terrifying at the same time.
Like most types of health insurance, the cost of any long-term care insurance policy will be based on several things:
How old you are when you take out the policy and your current health status. (This one should be obvious – the younger you begin, the better.)
The daily maximum paid out by the policy. (Lower maximums means less care later but more affordable premiums now.)
The types of services covered by the policy. (More services later means a higher premium now.)
The length of time the policy will continue to pay out. (Some are indefinite; others cut off after a predetermined number of years. Essentially, you’re making your best guess how long you’re likely to live once you’ve hit the point you need long-term care. You see why people love talking about this so much?)
You’ll also want to make sure you understand the insuring company’s policies regarding rate increases. If there are no limits as to how often they can raise your premiums, or the percentage they can be raised each time, you should probably look at other long-term care insurance options before committing.
The cost of health insurance can be daunting, to be sure. But while you want to be careful – shop around, compare your options, and recognize that in the 21st century, this isn’t your parents’ insurance market – decent coverage is also often more than worth the investment.
Why We Need Long-Term Care Insurance?
Ideally, of course, we’d start around age 16 investing and planning towards retirement, deferring today’s shallow impulses for tomorrow’s in-home nursing services. And most of us do make some effort to plan for basic retirement, even if we sometimes start too late, save too little, and just sorta… hope it all works out.
Medicare doesn’t cover most long-term care. Neither do most traditional insurance policies. In short, our world is changing and traditional coverage hasn’t caught up just yet. Given current hostilities over even existing types of health insurance, there’s no guarantee that we’ll be catching up as a nation anytime soon. It’s on you to make a plan – sooner rather than later.
I swear I’m not trying to be a total downer, here. What I’m trying to do is risk annoying you (and having you click back over to that funny cat lip-syncing video or see what new 70s cop shows Hulu has picked up) in order to suggest that maybe a great time to start planning on this upcoming time of life is, well… now. Like, today. Or at least start thinking about it. It’s a “tough love” approach, except I can’t actually take away your cell phone until you’ve learned more about long-term care insurance. Heck, you may be reading this on your cell phone, in which case that consequence would be rather counter-productive anyway.
Alright. If you’re still with me at this point (and thank you if you are), let’s get a bit more specific. See, the AARP has some bad news about Long-Term Care (LTC) Insurance:
By the time you reach 65, chances are about 50-50 that you’ll require paid long-term care (LTC) someday. If you pay out of pocket, you’ll spend $140,000 on average. Yet you probably haven’t planned for that financial risk. Only 7.2 million or so Americans have LTC insurance, which covers many of the costs of a nursing home, assisted living or in-home care — expenses that aren’t covered by Medicare.
Can you plan for retirement and extended care without an LTC policy? Absolutely. If you invest wisely and sufficiently and build up enough savings to live comfortably for 15 – 20 years after you retire, even factoring in increased levels of care, then more power to you. That’s how it’s supposed to work when everything goes according to plan, after all. If you realize you’re halfway to retirement, however, and don’t seem to be on track to have those sorts of resources, long-term care insurance might not be a bad idea.
Actually, let me put that another way. If you’re not already well on your way to a life of comfort and care after you retire, you need to look into LTC policies. Period.
Varieties of Long-Term Care Insurance
Long-term care insurance has admittedly had a bit of a rocky history. The same demographic changes that have proven somewhat beneficial to life insurance companies (longer lives mean more years of customers paying in before companies have to pay out) have been hard on LTC insurers. As mentioned above, consumers have been hesitant to buy LTC policies, and most insurance relies on large pools to offset risk.
On top of that, when we live longer without dramatic increases in how healthy and active we are after a certain age, the statistics and algorithms on which premiums and policies were based went out the window. Insurers lost money, and many shied away from long-term care insurance offerings altogether.
Competition makes the market grow fonder, however, and the 21st century has seen a minor resurgence in LTC policy options.
Protect your loved ones
Many life insurance companies now offer whole life policies which allow you to draw from your accumulated savings to pay for long-term care. This offers the best of both worlds, helping you pay for specific needs as you go while still leaving the maximum possible amount for your loved ones when you’re gone.
Others offer “shared care” packages which cover both yourself and your spouse. Benefits can be used by either of you or both of you in whatever proportion required, making this a particularly flexible and attractive option going forward.
Of course, these policies tend to cost a bit more. That’s how the insurance marketplace works – the more you’re guaranteed, the more you’ll pay. If you can accept basic long-term care insurance without convenient cash-out options or any guarantee you’ll use it, that’s where you’ll find the lowest premiums while still giving yourself a decent safety net for the future.
Start now
The easiest way to manage cost when it comes to LTC is to start early. Policies cost less the younger and healthier you are when you begin. Even starting when you’re 45 can save thousands over starting when you’re 50, and starting at 50 is way better than starting at 60. Looking into your options today is better than thinking about looking into them tomorrow.
Just trying to be helpful here. Don’t shoot the messenger!
When Does Coverage Actually Begin?
The specifics may vary from policy to policy. That’s why we’re big fans of “actually read stuff before you sign” around here.
Generally, however, most long-term care insurance kicks in when your physician determines that you’ve reached a level of cognitive impairment which makes it unsafe for you to be left entirely alone or when you’re unable to do two or more “activities of daily living” (ADLs) without assistance.
ADLs generally include:
bathing yourself
dressing yourself
preparing food and eating without assistance
sitting down, lying down, getting back up without help
getting on or off the toilet
controlling your bladder or bowels
Like many types of health insurance, you’re responsible for a portion of your own care before benefits begin. This isn’t technically a “deductible” since it’s not tied to a specific dollar amount. Instead, most policies require you to pay for services out-of-pocket for a set period – say, 60 or 90 days – before the insurer will reimburse. This is called the “elimination period,” probably one of the worst choices of terminology in all the insurance world.
Coverage generally comes with daily limits and lifetime maximums, meaning there’s no way around some uncomfortable calculating and educated guesswork when choosing between policies. That doesn’t mean it’s not worth the effort, and some coverage is generally better than none. But be prepared for a bit of an emotional journey, depending on how you personally process such things. If it helps, we all confront the same realities at some point, one way or the other. The difference is that you’re doing it before the true difficulty arrives. You’re preparing, not just reacting.
Speaking of which, when you’re ready to start shopping for long-term care insurance, ask if your state has any sort of “partnership program” designed to promote such policies. The idea is that insurers agree to meet certain state standards for their LTC policies, and in return the state makes it easier to access Medicaid as a supplement to the plan when needed. Not every state does it, and of course they all have their own Byzantine regulations and requirements, but given the money and type of care involved, it’s definitely worth looking into ahead of time.
How To Shop For Long-Term Care Insurance?
If you currently have some form of health or life insurance and you’re simply thrilled with the insuring company, it certainly wouldn’t hurt to ask about their LTC options and potentially “bundling” of policies. Not every insurer offers long-term care policies, though, so be prepared to do a bit more searching.
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You can certainly reach out to agents in your area, assuming you take the usual steps to make sure both the agent and the company or companies they represent are reputable and have whatever state certification is appropriate in your part of the country. Comparing insurance plans can seem tedious, but just keep reminding yourself that it’s not nearly as tedious as not being able to take care of yourself or get out of your recliner by yourself and having no one you can call for help.
Not to get dramatic about it or anything, but these are the realities of aging in the 21st century.
Medical science has extended life significantly, but it’s still working on keeping the quality up there where we’d like.
Finally,
Of course, as you may have guessed, the Insurry can help you shop for long-term care policies online as well. The 21st century has dramatically altered the world of personal and small business finances, largely for the better. The explosion of online options has forced even the most traditional institutions to become more competitive and far more flexible in how they interact with customers like yourself. (Even if you stick with your local brick-and-mortar insurance agent, credit union, and mortgage company, because you’re happy with their level of service, you might still have online lenders and insurers to thank.)
At the same time, it can be daunting to try to search through the hundreds or thousands of options on your own, trying to separate the wheat from the chaff and isolate those companies likely to meet your needs from those who are simply a bit overzealous with their keywords and search term optimization in hopes of dragging you in.
We don’t sell insurance or loan money or refinance mortgages ourselves, and we’re never interested in telling you what to do with your own money or which offers to accept or refuse. What we do at the Goalry is maintain carefully curated databases of reputable online insurers, lenders, and other financial professionals, and help people like yourself find those most likely to meet their needs in a way that makes everyone happy.
All we do is make the connection. It’s up to them to earn your business and to keep you happy. All you’re doing is expanding your options and learning a bit more in the process.
Let us know where you’d like to begin. Keep in mind, however, that none of us are getting any younger.