Long term care expenses can amount to hundreds of thousands of dollars over time without comprehensive insurance coverage.
Traditional and hybrid long term care insurance (LTCi) will help cover these extraordinary costs while also providing peace of mind.
A suitable policy will protect you, your family and your estate in the event that extended care is needed. It’s important to think of these policies as insurance plans first – and investments second. You are purchasing these plans in order to cover yourself against potentially catastrophic expenses.
Our independent agency offers traditional and hybrid policies from Assurity, Forethought, Genworth, Great American, John Hancock, Lincoln Financial, Mass Mutual, Mutual of Omaha, One America State Life and others. We work with individual, marital, and employer groups plans so our clients can confidently account for future medical expenses.
There is strong likelihood that some form of long term care will be needed for most seniors. Approximately 68% of people over age 65 will need long term care assistance whether it be in their home or another setting. The costs and lengths of time will vary, but bills can add up quickly. The average cost in a nursing home is approximately $220 a day. It will be less in rural areas and more in larger cities. The average cost in an assisted living facility is over $43,000 a year. Those figures represent significant amounts of money.
Purchasing a nursing home policy can be a difficult decision without the right information. There are several factors to consider when making the choice of whether or not to buy. Health concerns and family history are very important. For example, many consumers are interested in LTC insurance due to a family history of chronic illness.
Others become concerned upon the early onset of their own health issues. It is important to note that if your health is already in decline, many companies will not underwrite you for LTC coverage. In some cases, a hybrid insurance policy may be a good alternative.
Your personal wealth is also important. That is to say, what is the size of your attachable estate? Do you want to leave anything behind for your family? Does your spouse have enough income in the event that your assets ends up paying for an extended stay? How much insurance can you afford? What can I expect from future rate increases? There are many other questions to ask; these are but a few essential examples.
Long term care insurance offers an answer to many of the concerns listed above. Policies are designed to offer a predetermined monetary benefit for a chosen number of years after a short waiting period has been met, usually between 0-100 days.
Consumers often choose a longer waiting period as Medicare can cover up to 100 days for certain types of care, but not beyond that. Medicaid, on the other hand, will only pay for benefits once you have depleted the majority of your assets.
The newest entrants into the LTCi marketplace tether benefits to life and annuity policies. These plans are quickly growing in popularity as they offer estate preservation, asset growth, wealth transfer opportunities and protection from future rate increases.
Typically these plans are purchased with a lump sum deposit from an existing investment like a bank CD, annuity or paid up life policy. The policies leverage the invested dollars several times over in the event long term care is needed. This strategy is sometimes referred to as asset based long term care planning.
In this way, policyholders have a safe and insured asset that can increase in value each year, but also one that will pay health care benefits several times over their initial investment. Additionally, the medical underwriting associated with a hybrid life or annuity policy is usually simpler than with traditional coverage. There are several hybrid plans available and we can help find one that is most suitable for your needs.
In recent years, several new types of LTCi products have been developed that are more advantageous to the consumer including partnership programs. If a partnership qualified plan is purchased, then your resident state (Ohio is an example) will preserve matching benefit amounts in your estate once the policy benefits are exhausted.
In this case, the insured wouldn’t need to spend down all of the assets in his or her estate once their policy benefits had been depleted. For example, if you purchase $200,000 in LTCi benefits, then the state would allow you to shelter a matching $200,000 that would be free from government attachment – or claw back provisions.
As Medicaid benefits cut into fiscal budgets, states are offering partnership insurance plans to encourage the purchase of LTC insurance. These programs (where offered) promote the purchase of LTCi in order to reduce the size of the insured(s) attachable estate.
Newer LTCi policies are much more flexible than those of just a few years ago. The advent of hybrid coverage and several new benefit packages allow for choices that can account for most situations. Almost all policies pay benefits for expenses associated with a nursing home, assisted living facility, adult day care or care administered in your own home.
Additionally, some policies offer a “return of premium” option to consumers after several years of payments, while others allow you to share your policy credits with your spouse if he or she ultimately needs all of the combined benefit. Marital discounts are offered from many companies as well.
Several LTCi products will pay for care provided in your own home, an assisted living facility or within an adult day care center, as well as a nursing home setting. A family member who serves as your primary caregiver within your own home may also qualify for payment under some LTCi policies.
Hyers and Associates is a full service, independent insurance agency specializing in traditional, hybrid and partnership long term care insurance policies. Contact us today to compare quotes and illustrations while also discussing all of your options.