We could set aside money every year in a designated account, and eventually we may have enough to cover a potential long term care bill. But, would we be disciplined enough to do this or would we justify dipping into the account to pay for that trip of a lifetime or to help our kids or grandkids with their educations. Even if we did save, however, this plan could fall apart if care is needed sooner rather than later.
Depending on friends or family.
Our families may want to step in and help, but most families today are scattered across the country, and most of them have their hands full with their own family’s needs. Would they have the time or energy to help us? Would they move in with us, or would we move in with them? How long would they need to put their lives on hold…..and would we want them to?
Long Term Care Insurance.
Some people call this ‘nursing home insurance’, but the reality is, most people buy this insurance to stay out of the nursing home.
- Long term care insurance protects income and assets by providing a funding source of tax free benefits for qualifying care services that can be provided in the home, in the community, or in a care facility such as Assisted Living.
- Long term care insurance allows choice and independence in accessing the best care available. Covered services include home modifications such as guard rails and ramps, medical alert systems, homemaker services, meal planning and preparation, chore services, and specialized transportation.
- Long term care insurance offers care coordination – help with assessment of needs, researching care services, paperwork, scheduling, and monitoring care. One call to the company can get the claims process started, and the company will take it from there. The family is freed up from a lot of the details.
- Long term care insurance protects the income stream and lifestyle of your spouse by putting a safety net over your retirement savings.
- Long term care insurance offers incredible tax deductibility in the workplace for businesses, business owners, and employees.
- Long term care insurance is a legally binding contract that is guaranteed renewable. This means that no one can change the terms of the contract without your knowledge or consent.
Designing a plan.
There is no one-size-fits-all.
A wide range of companies and policies are available.
Quite simply, most long term care insurance plans consist of a pool of money with a monthly benefit limit. For example, you might choose a $200,000 pool with a monthly benefit of $4000. When eligible for a claim, the plan would pay up to $4000 per month for as long as there are funds remaining in the pool.
There are all sorts of options that may be included in a plan, and some that can be added for an extra charge:
- Shared care, so that spouses or partners may share or become beneficiaries of each other’s benefits.
- Inflation protection, so that the benefits increase in value as the cost of care increases.
- Return of premium when benefits have been less than premiums paid in.
Some policies can be linked to state partnerships, which allow policyholders to qualify for Medicaid benefits while protecting a significant portion of their savings.
Once all information is considered, the plan that evolves will reflect the policyholder’s personal and financial goals, concerns, and budget, while providing peace of mind in knowing their plans will be carried out.
Relatively new on the market are hybrid or combination policies that link long term care insurance with either life insurance or annuities.
They are 2 products in 1, and they have all the benefits of life insurance or annuities with the option to access tax free long term care benefits from the policy.
While not for everyone, many are attracted to them because there will be a known and positive outcome no matter what happens. One way or another, a benefit will be paid. If you need care, the policy will pay a long term care benefit; if you die without needing care or need care for only a short time, a benefit will go to your beneficiaries. And with some, if you want to cancel your policy, you can get your premium back.
Policies may be paid in full by retirement, and if you are concerned about care lasting a long time, some policies can be structured with lifetime benefits – two features that have all but disappeared from the traditional long term care insurance market.