Should You Consider Long-Term Care Insurance to Protect Your Estate?
Americans are living longer than ever. As we age, there are myriad things we need to think about: downsizing or managing our homes, how we’ll spend our retirement, our finances, who will care for us when we can no longer care for ourselves and more. Long-term care insurance should also be on that list. Even though most of us prefer putting off the conversation, the fact is that most families will have to think about long-term care at some point – and it’s much better to be prepared.
What is long-term care insurance?
It’s an insurance policy that helps to cover the cost of custodial care. According to the Association for Long-Term Care Insurance, custodial care “involves providing individual assistance with activities of daily living or the supervision of someone who is cognitively impaired.”
Long-term care insurance can be especially beneficial for individuals who have a disability or chronic health condition like Alzheimer’s or dementia and know that they’ll need an added layer of support as they age. In the event of an accident that precipitates the need for long-term care – like a debilitating auto accident – long-term care insurance can be extremely beneficial.
Typically bundled with regular insurance policies, long-term care insurance policies cover support for activities like getting dressed, feeding oneself, bathing and personal care. Private insurance, Medicare and Medicaid don’t usually cover this kind of care.
Why consider long-term care insurance?
Depending on the duration and type of care, long-term care can cost tens of thousands of dollars; these numbers can be devastating. According to Genworth’s Cost of Care Survey, the average national cost of a semi-private room in a nursing home is over $93,000 annually. In Massachusetts, that cost is over $150,000 annually. More intensive care or residence in a private room have even heftier price tags. Staggering!
Unfortunately, lower cost options don’t offer the level of service that you or your loved one may require or desire, and paying out-of-pocket is a burden that many families simply can’t bear. As American life expectancy continues to rise, you or your loved one could live for a decade or more in long-term care.
That’s why it’s so important to start planning for long-term care before the need arises.
When should I consider a plan?
We can’t stress enough that waiting until there’s a crisis is too late. Individuals in their 40s and 50s who are planning for their retirement are prime candidates to consider a long-term care insurance plan.
However, the one potential barrier to long-term care insurance is the cost of premiums, which rise as one ages. So does the chance of experiencing a health event or emergency.
How do I pay for it?
While a long-term care policy covers some of an individual’s long-term care, it might not cover every need. The most common way to pay for long-term care is through Medicaid, but requirements for that coverage are strict. Special benefits – like Medicare or those for Veterans, for example – may also be available but can be very limited.
Confusing? Absolutely. But the good news is that you don’t have to figure this all out on your own.
How to get started
It’s important to note that there are many types of long-term care insurance policies on the market. Some policies also have restrictions. It’s best to leave the navigation of the insurance maze to the experts: your financial planner and your elder law attorney.
Financial planners can help individuals identify plans most appropriate for them and their current – and potential future – situations.
An elder law attorney will help you look at your personal “big picture” to determine whether long-term care insurance is appropriate. Your elder law attorneys at Ladimer Law can help you protect your home and your assets so you or your loved one can receive the necessary care without having to sacrifice everything you’ve worked for.
If you would like to review your options for paying for long-term care, including long-term care insurance, call our office at (508) 532-8689 to schedule an appointment.
Julie Ladimer is the founder of Ladimer Law. She has been helping people complete their estate planning since 2014. She has been named a Rising Star by Super Lawyers three years running and received a Boston Magazine Five Star Professional award.