Long-Term Care Insurance- Is It Worth the Hefty Cost?

The odds are that if you are approaching retirement, a question you keep asking yourself is how you will cover nursing home or home care expenses. Long-term care insurance helps you make sure that you can afford one of the largest expenses a retired person may face – without burdening your children or spending their inheritance when the time comes. Still, millions of Americans skip long term care insurance because of the cost associated with the plans. Those considering long term care insurance coverage should keep reading to decide if a long-term care policy should be a part of your retirement plan.


What Is Long Term Care Insurance

One of the toughest questions you can ask yourself is whether you need long term care insurance. These insurance plans cover services that help out with “activities of daily living.” These activities are essential to independent living and include functions like eating, using the bathroom, and dressing. Long term care insurance can serve a crucial role in your retirement planning because Medicare and ordinary health insurance typically exclude these services from coverage. Medicaid, a government insurance program covering low-income earners, only covers residential nursing home care offered by specific nursing homes. 

While long term care insurance policies vary in terms of what services they cover, the plans typically pay for in-home services like unskilled care, health aide services, and adult daycare. They also include residential treatments provided by assisted living facilities and nursing homes. Long term insurance premiums are like life insurance premiums in that they vary based on the insured person’s health when the funds become available and other factors. Industry experts agree that a 60-year-old married couple will spend about $3,400 a year for a reasonably comprehensive policy.


Who Needs Long Term Care Insurance

Anyone 50 or older needs to start assessing their needs for long term care. Long term care can be costly, and that is true regardless of whether you are considering in-home or residential nursing care services. Nearly 70% of American seniors aged 65 and older will need some long term care services.

Just how expensive are these services? A 2018 study found that the typical nursing home stay of 835 days costs about $188,000 for a semi-private room patient. A long-term nursing home stay can crack and scramble a nest egg about as quickly as anything you could imagine for couples retiring on shoe-string budgets.


Alternatives to Long Term Care Insurance

Long term care insurance may not be right for everyone, but it is always good to plan for retirement. Whether you cannot qualify for long term care insurance, think the premiums are out of your budget, or are just shopping for the most economical way to address care costs, alternatives to LTC insurance plans exist. These are some of your options for long term care policies – together we can take a look at these and decide if any of them are right for you.


“Living Benefits” Riders for Life Insurance

A “living benefit” rider or “accelerated death benefit” on your universal or whole life insurance plan permits the insured person to pull out some of the death benefits while they are still alive. This money can pay for long term care, nursing homes, and other services. The best part about these riders? They are often written directly into the policy, and you may have life insurance plans that have this feature without even knowing it. 


Medicaid Estate Planning

Middle-class retirees often find themselves in an uncomfortable spot. They are too wealthy for Medicaid benefits, and they cannot pay for long term care services without impoverishing the surviving spouse. Medicaid estate planning involves using an elder law attorney to navigate a process that is part estate planning and part financial planning. Together with an attorney, we will advise you on reclassifying certain assets to ensure that you maximize your government benefits, protect your assets in a nursing home, and get the care you need to live a dignified life.


Viatical Settlements

A viatical settlement is a way to sell your life insurance policy at a discount for cash. Not to be grim, but most in-home nursing home stays involve hospice or end-of-life care. A viatical settlement allows a person’s loved ones to liquidate a life insurance policy to cover the best possible care expenses without creating an undue burden.

If you have questions regarding if you have enough of a retirement savings to self-insure against long-term care costs, please reach out to me and we can set up time to discuss your personal situation and plans.





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