Implications for long-term care insurance?

Because Excellus offers long-term care insurance, there is speculation that MA policyholders may be offered the option to purchase LTCi from the nonprofit insurer at some point in the future.  For now, however, there are no products available and local favorite John Hancock is still a great option for residents interested in the possibility of long-term care insurance.

Yesterday I was listening to an analyst from UBS who studies aging and demographic trends.  The premise of the Bloomberg podcast was that aging in America will have enormous complications in the future to our economy and our infrastructure.  Baby boomers have not done an adequate job in reproducing themselves, leading to a future problem.  Many refer to the children of the baby boomers as the “echo” and they are merely a replacement to their parents.

Because of all this, we face future economic issues as a country.  However, as individuals, we can purchase long-term care insurance and protect our families.  The article comments emphasize an important point: buy long-term care when you are healthy.  Statistically, this should be in your 40s or 50s.  When we look at people in their 60s, about 25% are uninsurable by this point.  By the 70s, almost half of applicants who want long-term care insurance cannot get it - they are declined by the carriers.

The surprising fact for many is that China is on the path to an even worse future than America with regards to population growth trends.  In fact, in just a few years, India will surpass China in population.  China is shrinking and will have some serious difficulties starting in about 2040.

The problem with China is that China does not have long-term care insurance; we should all feel fortunate to live in a country where we have institutions like LTC insurance.  As the article states, last year, more than 180,000 policyholders received over $3.5 billion in long-term care benefits.

Should You Buy Long Term Care Insurance At All?

It depends on your net worth.  Consumer Reports suggests that folks with $200,000 to $2 million in net worth are a good fit for long term care.  The wisdom on the street, where I spend my days, suggests it is more like folks with $50,000 and up considering long-term care insurance.  The peace of mind one gets from having an LTC policy cannot be ignored, nor can the costs of premiums.  At CoverageNet, we tailor long term care policies to fit a variety of budgets.  Another Long-Term care brokerage, LTCtree, has served thousands of clients in making long term care insurance decisions and advises some good ways to save on long term care insurance premiums.  The bottom line is, don’t put yourself in a box when considering long-term care insurance.

Back To Age: When’s The Best Age To Apply?

The year before you need the policy is the best time to apply, assuming you can qualify.  I jest, but the fact is, long-term care insurance is something that should be considered when you are at the peak of good health.  The difference between being insurable and not is only a doctor’s visit away.  The general rule is that the 50’s are a good time to look, though more and more people are buying as early as their late 30’s.

Indeed, Health is Key.

If you look at the numbers, you’ll find that waiting five years, premiums may increase only 20%.  However, the differences in health will raise your rates anywhere from 10% to 70%.  In fact, the highest rate classes are cost prohibitive to the point where very few applicants take a policy once placed in the lower rate classes.

You Know Your Family History Best

The best place to make decisions about long-term care insurance is at the family reunion.  Look at your relatives.  Do they play golf into their 90s, or is the family reunion actually held at the assisted living facility?

Provincial health care programs and employee benefits may not cover the full costs of a long term illness. That means your choice of care could be limited. LTCI can supplement government-sponsored programs and reduce the worry of protecting your assets and your choices. It can provide the funds to pay for the care you may need, give you options, and keep a long term illness from becoming a financial and physical burden on your family.

- Ang Perodilo Newspaper

So to those considering not getting a long-term care insurance plan, we would urge you to look again, for even under the most liberal of governments, long-term care is still an individual matter in many ways.

With recent Medicaid cutbacks, some nursing homes are no longer making a profit.  One example raised in the article was a home in Troy, Michigan, where the home was losing about $25 per day per resident.  Those numbers cannot go on, but things are being pinched from all directions.  And even worse in this case: the state required an extra nurse be added per shift, at a cost of over $100,000.  So the states, those lovely darlings, are simultaneously cutting funding and raising the cost of care.  Fantastic.

Long term care insurance is the only way out of this crisis.  Legislators and insurance companies need to come together now more than ever in order to come up with viable solutions for a long-term project that will both encourage consumers and protect them at the same time, fostering the sale of long-term care insurance.

Long-term care insurance is an important investment for people of all ages, but according to Consumer Reports, it is more important as people approach retirement age.  They also have some other important feedback for potential buyers, so take a closer look at their long-term care insurance research and feel free to ask us if you have any questions about long-term care or any of the associated insurance products.

With one in eight boomers developing Alzheimer’s as they age, there is a serious need now, more than ever, to look into long-term care insurance to pay for the long stay often required when the mind-wasting disease strikes.  We wrote about how you can stretch a policy and now may be a good time to revisit that article.  Alzheimer’s patients can have long-term care stays of as long as many years, going way beyond the 3-5 years typically associated with other ailments that activate long-term care benefits.

Figures range from $100 to $400 per day for long term care, depending on what is being provided.  Many Americans will use their policies for home health care, which is the least costly option usually, but is also the least intensive.  Next comes assisted living, which is of course a more intensive plan of care and is for folks with more serious conditions.

A reverse mortgage is just what you’d expect it to be… rather than pay the bank, the bank pays you!  Reverse mortgages are generally available to those 62 or older in the U.S.  The money can be paid in a lump sum, but is usually paid in small monthly increments.  Of course, as time goes on, the bank will have more and more of the equity in your home.  For seniors, this may be okay.  However, it does leave one less asset that  folks can leave for their children.

With half of those over the age of 65 expected to need long term care in the future, the numbers are staggering.  Many boomers don’t want to saddle their children with the worry and expense of caring for them as they age.  Reverse mortgages may indeed be one effective way to accomplish paying the heavy toll of long term care.

In addition to reverse mortgages, you’ll probably want to consider a long-term care insurance policy.  With this coverage, which costs a few thousand dollars a year, depending on your current age and health, you begin to make the investment necessary to protect your children in the future.

We’ve written extensively about this here.  In a nutshell, you can deduct your premiums in many small business setting and also if your health care expenses are 7.5% or more of your gross income.  The bottom line with this and all other issues is to ALWAYS consult a CPA/tax advisor prior to making any decisions that have tax implications.