Senior Health: The Facts About Long Term Care Insurance

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By Karl Edmunds:

For many seniors and especially elderly people, there is a constant nagging worry about the risk of getting sick or disabled in some way and being compelled to use precious retirement assets to pay for the needed care.

So far, roughly 8 million or so Americans have purchased long term care (LTC) insurance to mitigate these concerns. But LTC insurance is confusing to many and has multiple options that make it tricky getting your money’s worth.

First, LTC insurance is a product found only in the United States so if you plan to leave the country for your retirement or live outside the US now, it doesn’t make much sense.

Like any insurance, if you try to wait and buy just when you finally need it, you will likely make a mistake and the ultimate costs of the insurance rise rapidly as you get older.

More than just the formidable costs of insurance, seniors are buying LTC insurance to provide coverage if they live longer than anticipated, pay for costs that are not covered through Medicare and to ensure they don’t have to rely on friends and family to foot the escalating health care bills.

LTC Insurance offers a variety of flexible features to cover a wide array of possible needs including adult day care, nursing home costs and respite care as well as Alzheimer’s care, hospice, home care and assisted living.

An important feature as well is that your age is not a factor with LTC insurance. May buyers of LTC insurance are younger than 60 year of age. The personal motivation of buyers is that more than half of seniors above 65 will need long term care at some point.

From a tax perspective, in many cases the premiums on LTC insurance are tax deductible and the paid benefits are not considered income by the IRS but there are various factors including your age that affect the tax benefits so check with your tax advisor.

The core drivers of total premium costs for LTC insurance are typically your age at the time of purchase, the daily benefit you desire, any inflation coverage built in, your personal health rating, the length of time the benefits will cover you and the length of the elimination or waiting period.

Think of the waiting period like you would an insurance deductible. With LTC you will pay all the costs of care for a set period before the coverage begins. The longer you are willing to pay for the care the lower your premium will be. Take the time to study the costs of care in your geographic area so you can estimate how long you can afford to carry the cost before you need the coverage to kick in.

If you receive LTC insurance as a group benefit from your employer, be sure to read the fine print to understand portability, what happens if the policy is terminated by your employer, tax benefits provided and other factors.

Is LTC Insurance for you?

Many people are confronted with the high cost of health care while providing for parents or a loved one. This realization forces people to consider LTC insurance. A nursing home in today’s market can cost more than $50,000 per year with home care and assisted living costing less.

And with changes in the US health care system, many seniors wonder if Medicare will continue to pay even the short term care needs so may are facing. And to obtain Medicaid, you are forced to use up virtually all of your assets just to qualify.

LTC insurance is a risk management tactic. You must pay the premiums just in case you need the care. If you don’t ever need it, you have spent a lot for that protection. Check to see if a return of premium provision is available and whether it is worth the additional cost.

Good retirement planning compels you to consider LTC insurance as a key component of your long term plans. There are a wide range of policies offered and coverage varies so do your homework and talk with a competent insurance advisor to examine all viable options before you make a final decision.

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About The Author:

For more than 20 years, Karl Edmunds has been a noted author within the business and management consulting arena. As a senior, he now engages his curiosity and observations about life to write about key issues of importance to the growing community of seniors (Boomers), and the value of living life to the fullest every single day. Give me your comments and suggests at http://Plan-Retirement.org or http://For-Seniors.org