Long-Term Care Insurance: Pros and Cons
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The last months of my aunt’s life were spent requiring daily care. Her husband made the decision to have her taken care of by medical professionals at a nursing home. This was highly costly particularly due to placing my aunt in an up-market facility having an own room.
Expenses piled up very fast. Long-term care insurance is what my aunt and uncle had that enabled her get such good attention from caregivers. Without it, my uncle could not have afforded his wife such a facility, leading to great financial strain. This article will discuss the pros and cons of long-term care insurance.\
Are You Going to Need Long-Term Care Insurance?
Many truths of life are becoming more apparent for all of us. These days, we are living far longer than before with people like me living well into their 90s not being unusual at all; by the time I am reaching that age, surviving into your 90s will be the norm. This long lifespan means that we may need money to live for more than three decades following retirement. It is expected that a majority of Americans will spend some time in a long-term care facility such as assisted living or nursing homes.
Nursing homes according to the National Study of Long-Term Care Providers’ average stay is 485 days; though this might not sound like much, it’s skewed by Medicare beneficiaries who usually last only 23 days because they have limited coverage (Medicare covers up to 100 days post recent hospitalization for similar disease). Excluding these brief stays pushes the average duration up over 800 days.
At present time, Medicare offers up to one hundred days of skilled nursing home coverage after discharge from recent acute hospitalization for identical or alike illness. Using this program as a basis for long term care does not make sense because we cannot rely on it always working this way in future times too when we shall be seniors. In order to take care of yourself in the future, long-term care insurance may be necessary.
Long-Term Care Insurance Can Make Sense
In case you do not want your assets to be spent on facility expenses or cannot afford a facility that fits your needs, long term care insurance might make sense. It is designed to pay for chronic illnesses and conditions as needed. You will be charged premiums based on a daily payout (with an optional maximum lifetime payout) with the insurance covering most medical costs. This way you don’t need to deplete all your money or become a burden on your family.
You can get paid for treatment even if you never step into a nursing home surprisingly. Long-term care insurance often covers chronic conditions, whether wheelchair bound or having Alzheimer’s disease or bedridden. Whether you receive care at home, in a residential facility, day program or other places where these services are available, insurance could help with additional medical costs.
Premiums can also sometimes be tax deductible. For under 40s in 2020; it’s possible to deduct up to $430 of long-term care premiums which increases this figure to $5,430 among those who are aged above 70 years old. With itemized deductions and an adjusted gross income that exceeds 7.5% due to total medical expenses this could mean $10,860 from their taxes for married couple both aged seventy.
Before signing make sure that you read all of the small print carefully. Don’t put off buying Long Term Care coverage because you think that you will never require it!
Long-Term Care Insurance Pitfalls
Watch out for the drawbacks of long-term care insurance. All policies are not the same. Get the right coverage for your needs. Find out about coverage limitations and payouts as well as what kind of facilities are involved. A number of plans cover high-end facilities, while some do not. The last thing you want is being stuck in an inappropriate facility because your insurance does not pay for anything better than that.
Policyholders need to make payments before coverage starts during elimination periods which vary from one plan to another. The shorter the elimination time, the more effective the policy is said to be. Don’t sign or make payments until you understand all conditions of a policy.
The Bottom Line
Consult a financial planner when deciding on long term care insurance. Choose a specialist who does not receive commission fees for recommending particular insurance packages so that your choices are evaluated in your own best interests.
Purchasing appropriate long-term care insurance can save you and your family money. During a hard time, this was a big help and made my family feel assured by giving my aunt good long-term care protection at no added financial burden on them till she would have peace in heaven and let them focus solely on her requirements.
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