Long-term care includes a variety of services that help people when they are no longer able to care for themselves, regardless of age. The care is provided over an extended period of time and could be medical or personal. Personal care, which involves basic life functions referred to as Activities of Daily Living, includes assistance with bathing, dressing, feeding, transferring, toileting, and continence. It also includes care when needing assistance to protect oneself from threats of health and safety. It also includes care when needing assistance to protect oneself from threats of health or safety. One may be able to physically perform the activities of daily living but need to be reminded to do so. An example of this cognitive impairment would be Alzheimer's Disease.
Find out what the cost of care is across the United States by reviewing a 2019 Cost of Care Study. You can see what the cost of care is in three different city/state combinations not only today but in the future. It is important to know the cost of care today, but also in the future when you may need care. The benefit level you select in designing long-term care should take into account the future of cost of care.
No one has a crystal ball that predicts their future. We all hope we will not need long-term care. Look at your family health history. Check out your immediate family structure. Ask yourself direct questions:
- When did your parents die and what type of health issues did they have over the last 10 years of their life?
- How old are your children or siblings and where are they in their life curves? Most likely, your children will be in the prime of their lives and careers. Is it fair to ask them to take care of you? Maybe a better alternative would be to have them manage your health care because you have Long Term Care Insurance.
- Additionally, look at the assets you have accumulated over your life -- do you want to protect your assets for your spouse or family? Long Term Care Insurance helps preserve your wealth.
Medicare and Major Medical health insurance in general pay for hospital and doctor bills, for acute care or conditions and the recovery period. Health policies do not pay for custodial or personal care. Custodial care includes help with daily tasks such as eating, getting out of bed, toileting, bathing and remembering to take medications.
Medicaid will pay for long-term care expenses including custodial care, but only after you've qualified by paying down your assets to state-mandated levels (generally $2,000 to $3,000) for an individual. The well spouse may keep 1/2 of the combined countable assets up to federally mandated maximums (currently $113,000).
Social Security provides income for day-to-day expenses but is not adequate to pay for long-term care expenses.
Federal and many state tax codes offer incentives for the purchase of Long Term Care Insurance (LTCi). Take a look at the LTCi tax rules, published by the American Association for LTCi for a discussion of tax benefits when purchasing LTCi. If you have further questions, contact GEBA’s Long Term Care Specialists or your tax professional.
Insurance companies reserve the right to increase premiums through the life of the policy, depending on the overall claim costs, investment earnings, and persistency of policies remaining in force. State Insurance Departments must approve all rate increases in respective states.
The younger you are, the healthier you are, the lower the cost. Keep in mind that the cost of Long Term Care Insurance (LTCi) coverage will increase as you age. When you are younger, you are more likely to be in good health. If your health is good, you could qualify for a preferred health discount. According to the American Association for LTCi, the percentage of LTCi applicants qualifying for good health discounts in their forties is 42%, in their fifties is 32%, and in their sixties is 21%.
Some insurance companies are already introducing gender-based pricing, which reflects women using benefits more than men. If unisex rates are still available in your state, it will probably be a better value for you to buy before gender pricing is introduced.
If you can afford a small policy now, consider doing so. Your health is known now, pricing will be at your current age and the product features offered today will not necessarily be the same in the future. You can use multiple policies when you need care. For more information, schedule an appointment with GEBA's Long Term Care Specialist.