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Long-Term Care Insurance: A Guide

Long-Term Care Insurance: A Guide

July 20, 2020

Long-term health care costs can quickly wipe out your retirement plans. Long-term care insurance helps cover those unexpected extra costs. However, consider this type of insurance carefully because how much and when you buy are both important cost factors. Discover more information about what long-term care insurance is.

Purpose of Long-Term Care Insurance

Long-term care is care that extends beyond regular doctor visits and hospitalization. Often, people are released from the hospital before they can fully care for themselves. You still need regular help from a medical professional after your confinement. Generally, regular health insurance does not cover this extended care. So, long-term care insurance steps in to fill the medical gaps.

Uses for Long-Term Care Insurance

Long-term care insurance covers extended care in a medical facility as well as home care. Policies vary, but most will cover services such as home nursing care for dressing changes, bathing, toilet use, and therapy. You may also be covered to have someone do housekeeping and run errands while you are incapacitated. Some policies even cover pet care.

Alternatives to Long-Term Care Insurance

Medicare covers long-term care, but with limitations. Medicare long-term care coverage is usually restricted to nursing homes or other skilled nursing facilities for a short time. Medicare has limited coverage for home care. If you are younger and have a lower income, then you may qualify for Medicaid, but care is also limited.

You can also attach a long-term care rider on certain annuities. Critical care and hospital indemnity insurance can cover some long-term care situations. Hybrid life insurance policies have both a death benefit in addition to a long-term care benefit. You could also save up for long-term care through various savings plans.

Disadvantages of Long-Term Care Insurance

For most people, the main disadvantage of long-term care insurance is the cost. Premiums tend to rise as you get older. Plus, you may never need it and could end up losing much more in premiums than you would actually get out of your policy. Another disadvantage is that not everyone qualifies for long-term health insurance.

If you have any type of chronic health problem, then you may be considered high-risk and the company will deny coverage. Policies often have coverage limits, so you may not be covered for certain illnesses or injuries. You are also limited in time as many policies only cover you for a few years.

Best Age Range for Long-Term Care Insurance

You can buy long-term care insurance at any age. But if you buy it while you are young, you may pay premiums for an exceptionally long time before you need it. Many consumer and insurance advocates advise buying it in your mid-50s or after age 60 because you are more likely to need it as you get older.

The only real advantage of purchasing a policy at a younger age is that you are more likely to qualify. As you get older, you are more likely to have a disqualifying health condition. However, if you predict that you may experience health problems at a younger age, then you may be one of the few where buying earlier is a good move.

The majority of people will need some type of long-term care in their lifetime. The costs for this care can be prohibitive even if you need it for a short time.

With long-term care insurance, you will protect your retirement assets and get the care you need. Before you buy into a long-term care insurance policy, talk to a financial planner at Presidio Wealth Management. We can go over your portfolio and give you advice on long-term care insurance as well as other ways to protect your assets.