Long-Term Care Insurance: Best Decision
Jim Better recently participated in an interview by Tanner Gish, CDP, MA of Loving Homecare Inc. about Long-Term Care Insurance: Best Decision Not Enough People are Making. Here are the questions asked and Jim’s responses:
Q: What does long-term care insurance (hereafter “LTC insurance”) cover, and what does it not cover?
Long Term Care Insurance (LTCI) pays the expenses for care at home, assisted living and nursing home. The payments are triggered when the policy owner certified by a medical practitioner as needing assistance for two of the seven activities of daily living:(bathing, dressing, eating, continuance, toileting, transferring and cognitive decline)
Q: What are the most common misconceptions you
encounter about LTC insurance?
The most common misconception is that insurance is too costly. LTC contracts can fit into most people’s budget. The second most common misconception is that the government will pay for it. That may de true but at the at expense of having virtually no income.
Q: Is paying a monthly premium the only way I can
get long-term care insurance?
No Premiums can be paid monthly, quarterly semi-annually or annually. In fact, many policies can be paid for with a single premium.
I’ve heard that long-term care policies are much more restrictive today. Is it possible tI could pay for a policy, and when I need to use it (and my health condition qualifies me), but I would have become too old or passed a window in which can initiate my claim to my benefits?
In fact, with the passage of the HIPAA regulations in 1996, all tax qualified long term care policies must cover home, assisted living and nursing home expenses. Also, every insurance company asks the policyholder every year for an alternate contact to be contacted if coverage is to be activated or if premiums are missed.
Q: I’ve heard long-term care insurance is too expensive, or that if can afford it now, future pricing adjustments may make it too unaffordable.
Is this true?
Premium increases depend on the kind of contract that is in-force. Traditional contracts purchased prior to 2015 are likely to increase over time. Hybrid policies, however. those that are life insurance policies with long long term care riders. will never go up.
Q: Is there any downside to getting long-term care insurance?
What hedges exist or getting the security of this benefit, but offsetting the risk if I don’t. Hybrid policies pay off not matter what: (1) they cover long term care expenses, (2) if you die and never use the coverage, they pay off like a life insurance policy, and, (3) if you no longer need the contract, they give the policyholder some or all of their premiums back.
Q: What kind of balance sheet does a person need to have to consider themselves “self-insured” against long-term care costs?
Let’s assume a Parkinsons Disease that lasts ten years: Nursing home cost of $100,000 per year times 10 years = $1,000,000. That’s today. Nursing home costs are increasing by 5% per year. You do the math!