Jan 02 2015
Long Term Care (LTC) insurance. To get it or not to get it. Maybe you are thinking about yourself and a spouse. Maybe for your parents.
You must first understand what it is. LTC insurance pays for services (usually in-home but can also be at a facility) required to care for a person who can’t care for them self. It covers costs associated with feeding, clothing, toileting, mobility problems, bathing, or continence issues.
LTC issues are not covered by any health plans, TRICARE or Medicare. They can be covered under Medicaid (medical welfare) but that becomes its own problem since you have to meet the financial need requirements for Medicaid—in other words you must be poor. For most with a form of pension pay, like military retirees, your retired pay may disqualify you for Medicaid.
Whether to buy LTC insurance is a tough choice for several reasons:
- One is that the premiums are expensive. If you buy it while you are “young”, it is a lot cheaper but chances are you will paying forever before you’ll ever need to energize it. Most users are well up in years. If you wait until you are closer to the age you’ll need it, it will cost a fortune or you may not qualify for the insurance because of older age health reasons.
- Two, will you actually need it? There are many statistics about the need for LTC insurance as you age. The older we get, the more likely it is we will need it. Especially since we are all expected to live longer and longer as medical advancements continue to lengthen our ages. Congratulations, you are living longer…but you’ll probably need assistance to live. University studies have indicated almost 70% of people over age 65 will need long term care assistance at some point. By the way, not only seniors need long term care. Younger people may need it as the result of a car wreck, a fall, something hits you in the head, a disease or illness…
- Three, the LTC insurance industry is in flux. In the earlier years, the insurance companies miscalculated the demand and costs of the benefits. LTC companies have gone out of business, merged with larger companies, or raised their premiums to meet the greater demand from policy holders.
- Fourth, the scare factor. If you need long term care assistance, it is very expensive. Without LTC insurance, prepare to pay dearly for long term care services. A full-time, assisted living facility can run upwards to $80,000 a year—yikes! Go to this government site to look at the various costs in the country.
- Finally, which form of insurance do you choose to purchase? Insurance companies are getting creative as they try to best address the long term care needs of people. Choosing the right policy is confusing and there is always the unknown of whether you purchased the right plan until you need to use it.
As is the often the case, it’s those in the middle who get squeezed in this decision. If you have few assets, you may qualify for Medicaid in a LTC situation. If you have plenty of assets, you will pay as you go when a LTC need arises.
For those in the middle, assess your assets and project your ability to cover the costs for LTC services. How long could you pay $25,000 (or up to $80,000) a year without destroying your current life style or your future living standard? What happens if you use up your assets on your spouse’s LTC needs and you are left to fend for yourself? Is paying $2000 to $7000 (a general range) a year in LTC premiums worth the price?
Learn more about LTC insurance on our MOAA web site with our LTC Insurance Primer. MOAA members check into our MOAA benefit, the Long Term Care Buying Service below. Check the Federal Long Term Care site if you are a federal/military employee or retiree. Other LTC information sites are, the American Association for LTC Insurance and this Consumers Report magazine article.
For MOAA members
Don’t forget the MOAA LTC Buying Service. Call 1-800-698-7943 for details, or visit MOAA’s Long Term Care webpage for more information.
You also have access to MOAA’s Understanding Long Term Care publication as a free download with your PREMIUM or LIFE membership!