Judson Haims: Consider Long Term Care Insurance, but shop around
February 26, 2018
Long-term-care insurance (LTCI) is not an insurance most people know about.
Dealing with a situation where you or a loved one become unable to assist with daily tasks that were once considered mundane and common place can be difficult. It's going to happen, though. At some point we all will slow down or encounter an ailment that is going to undermine our ability to live autonomously. Odds are, most people will need help with daily activities such as driving, preparing meals, bathing and, in general, living a quality life. Will you be prepared for such times?
When medical challenges occur that incapacitate someone for a week, month or even a year or more happen, an LTCI plan or a self-insured plan may be needed.
I don't want to disillusion anyone, mentally and financially — preparing for a time when tending to daily life tasks becomes challenging is not something most of us prepare for or even conceptualize. Saving for a house, general bills, a trip and college take a front seat. It takes great discipline to prepare for a time that is hopefully very far in the future.
Financial planners may be the best people to speak with to discuss the pros and cons of an LTCI plan or a self-insurance plan. The concept behind self-insured planning is that over your lifetime you have had the ability to invest your money well enough to provide the funds needed to pay for your long-term needs. On the other hand, LTCI requires that you have enough income to support the monthly or annual premiums. Regardless of the method of insurance you choose, my advice is to make a plan for long term needs. Odds are, you are going to need some help in your later years.
Whether you are seeking some advice for a family member or simply looking to protect yourself in the future, long-term-care insurance might be a viable option. As health awareness increases and medical care improves, we can expect to live longer than any generation before us. As we live longer the need for care in our later years increases. Illnesses and injury can be prevented, but the odds are we'll still need assistance with the activities of daily living.
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Long-term-care insurance can be the means to provide the necessary support. Below are some points to understand about LTCI:
1. LTCI can provide coverage in the home or in an alternative facility such as private, assisted living, adult day care and nursing homes.
2. LTCI gives you a choice of provider. You're not limited to certain government approved facilities.
3. LTCI can provide a benefit for life so you won't run out of coverage. Depending upon the daily benefit amount you anticipate you may want, a policy for you and your spouse could cost somewhere in the range of $2,500 to $3,500 a year if you are 55 or older.
4. LTCI is available with certain life insurance and annuity products (if you ever need care, you can use the money you've invested or pass it to your heirs). This is a newer type of insurance product and may be a good option for many in their 40s and 50s.
5. LTCI offers several tax advantages. Premiums are includable as a medical expense on individual income tax returns. Qualified LTCI benefits are tax-free.
Nursing homes, assisted-living centers and home care are expensive and can quickly deplete your savings. Buying a long-term-care insurance policy can be a way of assuring your future needs are met in a manner of your choosing.
Long-term-care insurance is one vehicle, but like most financial products it needs to be understood before you can make an intelligent decision for your unique situation. According to the American Association for Long-Term-Care Insurance's 2018 Price Index analysis, the costs for virtually identical policy coverage vary significantly from one insurer to the next, so shop around.
Judson Haims is the owner of Visiting Angels Home Care in Aspen, Basalt and Carbondale. His contact information is http://www.visitingangels.com/comtns, 970-328-5526.