SHOULD YOU CONSIDER LONG-TERM CARE INSURANCE?

None of us wants to think about spending our retirement years in a long-term care facility. In fact, it’s very easy to ignore the reality of the situation. But barring catastrophic circumstances, life takes its toll on us and often renders us in need of long-term care. Did you know:

• For a couple turning 65, there is a 70% chance that one will need long-term care.
• The average facility stay is about 3 years.
• In 2018, a private room will cost over $500/day ($188,000/year).
• The average daily rate for private room in nursing home is $209.
• The average hourly wage of home health aide is $19/hour.

Since Medicare and health insurance don’t cover most of the costs of long-term care, a long-term care policy may be a good protector of your assets. Long-term care policies charge a fixed monthly premium based mostly on your age when you purchase the policy. The policy is “guaranteed renewable,” which means that as long as you pay the premiums, you will have coverage (for so long as the company offering the policy is still in business). Premiums can increase over time, sometimes dramatically, so be sure to research the policy issuer’s financial stability and claims history. Premiums are lower the younger you are at the time of purchase, and most policies do consider your medical history in calculating your premium. If you wait until you are older and have a poor medical history, it may be difficult to find a policy at all.

You should consider long-term care insurance if:

• Your net worth is between $100,000 and $1.5 million (not including your primary home and car), and you want to protect your assets for a spouse or family members should you need long-term care. If your assets are lower than $100,000 you may soon become eligible for Medicaid should you need care. If your assets are greater than $1.5 million, you can likely pay for the care without insurance.
• You have no family who would be willing or able to care for you should you need long-term care.
• You have a chronic health condition or family history that increases the likelihood of needing long-term care in the future.

Who should not buy long-term care insurance? Generally, there are 3 groups of people who probably won’t benefit from purchasing long-term care insurance: those whose net worth is below $200,000 since they would soon be eligible for Medicaid if long-term care is needed; those whose net worth is $1.5 million or more because they can likely pay for the care without insurance if it is needed; and those who cannot afford the premiums or won’t be able to later if there is an increase in the premium.

If you plan to purchase long-term care insurance, be sure you input your premiums in Income Strategy.