A 2015 cost of care survey from insurance company Genworth Financial estimated the national median cost of care for a home health aide to be almost $46,000 annually, while the national median cost for a private nursing room home is more than $91,000 annually. Because of such high costs of care, some people are considering long-term care insurance to help with payment for these expenses. However, if you’re considering purchasing this insurance, you need to know that it is costly, that there is no such thing as one-size-suits-all, and not everyone will qualify.
It is money well spent to talk to an elder law attorney to see if these policies make financial sense. They can review a person’s assets and any other coverage they may have from Medicare, Medicaid and other state and federal programs that are designed to support the sick and elderly.
For those who don’t have many assets, an LTD policy will likely be so costly that it will not be worth that cost. While it is true that these policies are less expensive for younger and healthier people as you age nothing prohibits a company from charging a higher premium as you age.
In fact, historically, premiums have gone up dramatically as people age. With rising premiums, buyers must also consider if they’ll have future assets to cover premium increases. Some policies have optional non-forfeiture riders that will protect what was already paid if a policyholder can no longer afford the premiums. While nice to have, that is not really one’s objective when buying long-term care insurance.
LTD policies require medical underwriting, and having pre-existing illnesses will increase the cost. There are also many situations where a person won’t be eligible for coverage, including cognitive impairments such as dementia, Parkinson’s and Alzheimer’s.
There is no such thing anymore as an LTD policies for a lifetime, rather currently policies are written to last as long as the money purchased by the policy is available, likely three or four years but this is where the elder law attorney can offer an invaluable plan to help fund the remaining years without having to forfeit the assets generated by a lifetime of effort. Without such planning, when the policies end, people have no other option than to use their other assets if they still need care.
If you or one of your loved ones is facing the prospect of having to pay $46,000 to $91,000 over the next year in long-term care cost isn’t it time to schedule a consultation? Just give us a call or request a consultation online. We can help.
Reference: Chicago Tribune (November 6, 2017) “Thinking of buying long-term care insurance? Consider these costs”