Long Term Care Insurance – What’s the Best Age to Start Planning?

When it comes to planning for a sound financial future, young professionals building a career have much to think about. And, it’s only natural to think of long-term care as something essentially for one’s parents or grandparents. Nothing could be farther from the truth and regrettably many people put off gaining an understanding of the topic until it is too late. The analogy is waiting for a hurricane to hit your city before devising a plan to protect your home and family.

What Is Long-Term Care? Quite simply, long-term care refers to a broad range of medical and personal services and assistance that is provided over an extended period of time. Most people associate needing long-term care as a result of aging or a cognitive impairment such as Alzheimer’s disease. But, many younger people require long-term care services following accidents. Typical ones you hear about are motorcycle accidents or falling off the roof while cleaning gutters.

The mention of long-term care also generally brings to mind images of a nursing home. Again, a false impression, as most long-term care today takes place in ones own home or a facility other than a skilled nursing care facility.

Who Pays for Long-Term Care? Generally speaking, any health insurance you may have on either an individual basis or through your employer only pays for doctor and hospital bills. As a result, most of the costs for long-term care are not covered by these plans. And, when you reach retirement age and qualify for Medicare, it’s important to understand that Medicare pays little of the cost (if any) for long-term care.

So, who pays? Most often the individual receiving the care or their family members pay. Like medical expenses, long-term care can be equally costly – especially if you have to pay the entire cost from your own savings. Some 30 years ago, insurers began offering a form of protection called long-term care insurance designed to pay for qualifying care. Today, some eight million Americans – ranging in age from their 20s to their 90s own long-term care insurance protection. That number grows yearly.

What Does Insurance Cost? The cost of long-term care insurance is determined by certain factors. These include your age when applying for protection, the amount of benefit you are eligible to receive and whether you opt for protection that pays for care in your own home.

The younger you are, the less long-term care insurance protection costs. But, while insurance premiums generally increase about nine percent for each year you wait to apply, here is the most important fact younger people fail to recognize; one must health qualify for long-term care insurance. Your good health today can qualify you for significant yearly savings (similar to how good driving habits will reduce your car insurance). Perhaps more important, a change in your health — even one that is not life threatening — can cause you to pay as much as 20 percent more each year or make it impossible for you to qualify no matter how much you are willing to pay.

Long-term care insurance protection can be far more affordable than young people think. Leading insurance companies offer discounts to married couples that can reduce the cost by 40 percent yearly when both partners obtain coverage. An increasing number offer discounts for unmarried adults who are living together.

Some other ways to significantly reduce the cost is by adding a deductible period (referred to as an Elimination Period in long-term care insurance protection), choosing a limited benefit period (say one that pays benefits for three years versus one that provides unlimited coverage.

Can Insurance Be Tax Deductible? The short answer is, it can be — especially if you own your own business. Recognizing that government programs do not adequately pay for long-term care insurance, federal and a growing number of stet tax codes now offer tax incentives to encourage Americans to take personal responsibility for their future long-term care needs.

Business owners can deduct the cost of long-term care insurance protection for themselves, for their spouse and their tax dependents on a favorable basis. Owners may be able to deduct 100 percent of the cost and a knowledgeable long-term care insurance professional can tell you how to qualify.

Does Your Employer Offer LTC Protection? Long-term care insurance policies are increasingly being offered as an employee benefit. In many cases these policies offer outstanding benefits and affordable protection. Some employers will even pay for a base-level of insurance protection and allow employees to purchase additional levels at discounted rates. If your employer offers you a minimal level of long-term care protection at no cost. be certain to take advantage of this no-cost benefit.

Younger individuals who would qualify for good health discounts as well as spousal and partner discounts should compare policies offered by the employer with those available from an independent insurance professional. You may find you are able to obtain higher levels of protection for less cost.

Getting More Information: When you are ready to get prices for protection or determine if any existing health conditions will prevent you from obtaining insurance coverage, contact an experienced local long-term care insurance professional.

Long-Term Care Insurance – What to Do & What to Avoid

Long-term care financing and planning takes some thought and education to put together a policy that is best for you and your financial situation. It is easy to get confused and become paralyzed into “inaction.” Here are some key points of what to do or not do.

Purchasing Too Much Coverage:

It is important to get some type of long-term care insurance without over insuring. Look at your finances and determine how much you can comfortably afford to pay for long-term care and co-insure with your long-term care insurance policy. Purchasing long-term care insurance can be compared to buying an auto. A Ford will get you to the same place as a Mercedes, but it will cost you much less. Having some long-term care insurance is better than not having any long- term care insurance.

Waiting Too Long:
You will not save money by waiting to purchase long-term care insurance at a later date. The cost for you today is less expensive than it will ever be. As you get older, the rates go up.

Inflation Protection:
You need to seriously consider 5% Compound Inflation Protection, especially if you are under 70 years of age. It costs more, but it adds all the value to your long-term care insurance policy.

A Sound Long-Term Care Plan:
It is necessary to learn what your options are in the event that long-term care is needed. Do you have the assets to cover the expenses and still live the lifestyle you desire? Where do you want to receive care? How quickly can you liquidate your assets? Will you lose money if you liquidate? What are the tax consequences? Do we have enough income to live on?

Impact on Family:
How will a long-term care event affect your family? What happens when a spouse needs care? Will this affect the work of the other spouse? Is the family capable of providing the necessary care? Can the children help? How will this affect their work and family?

Medicare:
Many think that Medicare will cover all of the costs of long-term care. This is not true. It covers some very limited costs that meet Medicare’s criteria.

Comparable and Competitive Quotes:
Some companies are more competitive in relation to age or health status. Long-term care insurance quotes should be compared from at least three of the top companies. Different companies have unique “sweet spots” depending upon age, marital/partner status and health

Long-Term Care Insurance Specialist:
Consult with a Long-Term Care insurance Specialist, an independent agent that stays informed of new plans that come into the marketplace. A long-term care specialist can easily help you compare the different plans getting them closer to an “apples to apples” comparison.

Shopping by Price:
Getting the lowest price for a long-term care insurance policy is not the way to plan. The cheapest price may or may not have the options that you will need when you are ready to use your plan.

Top Carriers:
When getting long-term care insurance quotes from three different companies, it is important to check the financial ratings of the company. You should look for companies with at least A ratings.

Long-Term Care Costs:
You need to be informed of the real cost of long-term care (home care, assisted living, nursing facilities) in your area. If you live in an expensive State, you will need to adjust your long-term care insurance benefits according to what the costs are in your area. If you are planning to retire to a less expensive area, then that should also be taken into consideration. Different considerations should be taken if you are planning on living overseas.