The U.S. Department of Health and Human Services reports that 69% of people will use long-term care services at some point. Many people find long-term care insurance worth it because it offers peace of mind knowing that they won’t drain their assets or put undue pressure on family members.
There are two broad misconceptions (or myths) about long term care (LTC). The first myth is that people think that their LTC will be covered by other types of insurance. The second misconception is that they will not need LTC, and that even if they do, that they will be able to cover the costs with their current financial resources (savings or retirement accounts).
Listed below are common myths that mostly fall into those two broad categories. Myth #1: My health or disability insurance will cover my long term care. The truth is: long term care is NOT covered by other kinds of insurance, including your HMO, health or long term disability insurance. Only LTC insurance you typically purchase on your own covers day-to-day personal care assistance when you are unable to perform certain activities of daily living. Myth #2: Medicare or Medicaid will cover my long term care. Most people incorrectly think Medicare will pay for long-term care services. In reality, Medicare does not generally cover LTC. Medicare pays for skilled care in a nursing home only for short periods (only up to 100 days) while you are recuperating following a hospital stay for a related condition; but that’s not the same as LTC. Once your care needs stabilize, and you need personal or custodial care, Medicare will not pay these costs. Medicare will only pay for care at home under very limited circumstances.
Medicaid pays for LTC only for people with very low assets and limited income.
Myth #3: Long term care is only for the elderly. The fact is, the need for LTC can arise at any time in a person’s life. While the majority of people who require LTC are elderly, younger people can require it anytime due to severe unexpected illnesses, diseases, injuries or accidents. Myth #4: My family and I probably won’t need long term care. Studies show, that a 65-year-old today has a 70% chance of needing LTC services at some point during his or her lifetime. And, when you consider that people are living longer on average, the chance of needing LTC is likely to increase in the future.
Because LTC can be needed for many different reasons, it’s difficult to know if you’ll need it or not.
It’s better to purchase a LTC insurance policy when you’re still in good health — generally in your 50s — than to wait until you’re ill or older, when it may become unaffordable. The younger you are, the lower your premiums will be.
Myth #5: I won’t need LTC insurance because my family will be able to care for me. Fact: While families do and will continue to provide care, it’s impossible to know for sure if your family would be able to care for you if LTC becomes necessary.
It is possible that the type of care you might need will require professional help or a stay in a nursing home or assisted living facility.
For many married couples, because the wife often out-lives her husband, she is less likely to have someone nearby who can provide care for her. In addition, caring for a family member can be a huge financial and emotional burden on your loved ones.
It is important to decide how you want to be cared for and ensure that you are protecting your family.
Due to the high cost of long-term care, 63% of caregivers end up using their own retirement and savings funds to pay for care. Plus, the logistics of caregiving might not be feasible if your family members live far away or can’t manage it because of work or family obligations of their own.
Myth #6: Long-term care insurance is only for nursing home care
Fact: When people think of long-term care, most think of nursing homes. However, more than 76% of people who receive LTC are in home or community-based settings, not in nursing homes.
Long-term care is needed when someone can’t perform daily activities such as dressing, eating, bathing, or transferring – and this help can often be provided in your own home through a home health aide. Though it’s not necessarily pleasant to think of scenarios where LTC will be needed, LTC insurance can help cover the costs. It may offer a way for you to receive care in your own home instead of in an assisted living or nursing home.
Myth #7: My savings will cover my long-term care
Fact: There are various types of LTC, from help with daily chores and activities to full care in a private nursing home room. The median assisted living facility costs $48,000 per year (2020 data), and the median nursing home costs $60,225 per year (in TX), and that’s for a semi-private room. Adjusting for inflation (3%)—in 2040, that semi-private room will cost $108,770/year (Genworth.com).
With costs for LTC on the rise, retiree nest eggs may not be big enough to cover these expenses. An unplanned health care expenses can drain retirement accounts.
Myth #8: My family can’t afford long term care insurance. Long term care insurance is more affordable than you might think and can be tailored to meet your needs and your budget. The costs of LTC insurance can be managed by creating a retirement plan or a financial plan that is right for you. In addition, LTC insurance premiums are more affordable the younger you are at purchase.
Why is LTC worth it?
Long-term care insurance steps in if you develop a health condition that requires you to receive care and supervision. Without long-term care insurance in place, you may burn through your life savings or have no choice but to rely on a family member for care. Long-term care insurance is worth it because it protects your assets, spares your family from financial and emotional stress, and puts you in control of your health decisions.
What are my options for LTC insurance?
In the past, many LTC insurance policies were sold as standalone policies. They offered coverage only LTC coverage in either your home or in a specialized facility. Today, almost all LTC insurance policies are hybrid policies that bundle LTC coverage with life insurance coverage (or an annuity). Long-term care insurance hybrid policies offer your family protection in the event you pass away, while also giving you the peace of mind knowing that your LTC needs are covered. They truly offer the best of both worlds, plus they can save you the hassle and expense of buying two separate policies.
When should I buy LTC insurance?
Today, most long-term care insurance policies come bundled with life insurance coverage. Because both long-term care insurance rates and life insurance rates generally increase with age, it’s best to start shopping for a hybrid life insurance and LTC policy when you’re in your 40s or 50s. That said, you can still buy a policy if you’re in your 60s or older—just know that you’ll probably pay more than someone who’s younger.
As shown in the previous panel, you can use the calculator on this website to determine your LTC Insurance needs. We are also available for a complementary LTC Analysis or Review.
Obtaining Long Term Care Insurance falls under Financial Advising (unless it is part of our Retirement Planning services)
Our rates for Financial Advising are $180/hr and are capped at 4 hours ($720) for LTC planning.
Long Term Care Insurance planning, like all of our services, are customized (no “cookie-cutter” planning here). Some individuals have simple and straightforward situations. Others have complex circumstances that will take more time to create a solution. That is why we charge hourly rates. However, we also have caps, so that the maximum charges are not open-ended.