Among the most heart-wrenching pictures during the first months of the pandemic were images of the impact it had on our most vulnerable populations: our elders. Birthday parties through windows, the isolation of lockdowns – many people wished they were living in their own homes with the freedom that brings.
The problem is that many people don’t plan for care. If you don’t have a plan for what can happen if you need care, it can cause stress – to your finances, your health and your family relationships.
Long-term care is expensive, and prices are increasing dramatically. According to the most recent data from Genworth, the cost for care at home averages $24/hour nationally. If care is needed eight hours per day, that translates to $70,000 per year for home care. And simple economics say the costs will increase. According to a recent Axios article, the interest in home care careers on Indeed.com has gone down 15%, while the demand for home care providers has increased 33%.
Factor in a declining birthrate and the conclusion is simple – home health care costs are going to get much more expensive in the coming years. And while many people mistakenly believe that Medicare or Medicaid would cover their care expenses, this is often not the case.
That’s where long-term care insurance (LTCI) can come to the rescue. LTCI pays for care at home, as well as nursing homes and assisted living facilities. Long-term care insurance steps in if you develop a health condition that requires you to receive care and supervision. It is surprisingly affordable, especially for those who are younger and healthy. And benefits are typically received tax-free.
Here are three things that most people don’t know about long-term care insurance:
- The focus is on home care benefits, not nursing homes. As mentioned, LTCI can cover nursing home and memory care. However, the vast majority of people want to stay at home, and that is where this insurance shines. When a primary caregiver needs help, they simply call the insurance carrier, who can help locate qualified local home care services. In most cases, the insurer will pay benefits directly to the home health care agency. If you aren’t happy with that agency, policies let you choose another. It’s not managed care, it’s care that is managed to help a family.
- Plans offer benefits that increase automatically to keep up with inflation. Inflation is a real concern, and long-term care insurance plans are there to help. Plans offer inflation riders, which allow the benefit to keep up with the costs of care. Some of these riders increase benefits by 3% compounded annually, others by 5%.
- There are flexible options to pay premiums. LTCI has policies for any budget. For example, clients with investable assets can reposition a portion of those assets and purchase a single premium plan. Or someone can purchase a premium that lasts for 10 years or until age 65. Finally, there are ongoing lifetime premium options that can be paid on an affordable monthly basis.
When you first look at long-term care insurance, the options may be overwhelming. Working with an insurance professional well versed in LTCI can help you find the right policy for your situation. Get started with our Agent Locator.