There are many factors to consider when planning for retirement. Saving money is obvious, but don’t forget to consider your healthcare needs, too. Long-term care insurance (LTC) can help protect you financially from unexpected health conditions well into your golden years.

Even if you’re healthy when you retire, it isn’t guaranteed you’ll stay healthy throughout your retirement. As you get older, it’s only natural to experience normal aging that effects the heart, bones and joints. But it’s important to prepare for potentially serious health conditions. Some people may feel that there are pros and cons to long-term care insurance considering only 14 percent of Americans think they will need home health care as they get older. Actually, about 70 percent of Americans will require long-term care at some point in their life. That’s a whopping 500 percent underestimation.1 Long-term care insurance comes with financial benefits and, of course, healthcare benefits. Let’s break it down.

What is Long-Term Care Insurance?

Long-term care insurance is an option for people who are unable to perform basic everyday tasks on their own—like stepping out of bed or getting dressed—or those who have a chronic illness or disease, such as Alzheimer’s. It’s considered “custodial” care rather than medical because it’s designed to help people who need assistance with daily activities. Places where long-term care services are provided include:

  • Nursing home
  • At home
  • Assisted living facility
  • Other community-based settings

Long-term care insurance can be used if you’ve been in an accident or have an illness that resulted in needing long-term care. Skilled, intermediate and custodial care are provided with LTC insurance. The types of services included in each category and how often it’s received are:

Skilled Care

If you have a treatable condition, skilled care helps you recover, and it is provided on a daily basis. You may receive care from a nurse or professional therapist.

Intermediate Care

Intermediate care is provided to someone who has a treatable condition, much like skilled care, only it is not provided daily. For example, a physician might require you to have physical therapy only a few time a week to treat a broken arm after an accident.

Custodial Care

If you cannot perform daily activities like getting dressed or getting out of bed, custodial care will provide you with daily assistance at home or at a nursing home that can range from a few days a week to 24-hour care.

LTC insurance is a supplemental plan separate from your health insurance, since Medicare, Medicare supplement (Medigap), traditional health insurance, and disability insurance plans usually don’t include long-term care coverage. Hybrid policies give you the option of combining long-term care insurance as a secondary benefit with life insurance as the primary. This way, if you live longer and don’t need life insurance anymore, you can use the hybrid policy toward long-term care needs. It works the other way around, too. If you never need long-term care, you’ll instead have a death benefit for your beneficiaries.

Long-Term Care Insurance Costs

The premium cost will vary based on the plan and how much coverage you want. The benefit amount and period of time a plan’s coverage lasts will both effect the cost. Your long-term care insurance premium will be in addition to your regular health insurance because it’s a separate policy. However, long-term care insurance rates are lower for people in their 40s and 50s. People age 60 and older will have a considerably higher premium.2 According to the American Association for Long-Term Care Insurance, a couple who are both age 60 can pay a combined monthly premium of about $160 for a plan that includes benefits for at-home care or services at a skilled nursing facility. A single 55-year-old male or female could pay as low as $80 per month for their premium.

Protecting Your Assets

Having long-term care insurance could keep you from a financial burden for you or your children. On average, a home health aide costs $19 an hour, and full-time care at a nursing home costs $84,000 a year. It’s been estimated3 that couples should save roughly $400,000 for healthcare costs post retirement. The last thing you would want to do is use your personal savings that’s been designated to other needs, especially when life expectancy has increased in recent years and the fastest growing age group in the U.S. is more than 85 years old.4

Including LTC insurance is a preventive financial measure to take when preparing for retirement planning. Something else to think about is where you or a loved one might stay if an illness or disability limits your self-care and assisted living is needed. Speaking with advisors from referral services like A Place For Mom could take away the stress of choosing the best living options for seniors. These advisors offer guidance on how to pay for senior care – including long-term care insurance – as well as researching veteran’s benefits and finding the right nursing home or assisted living facility for you or a family member.

It’s important to remember that you will not be eligible for long-term care insurance if you are already diagnosed with an illness or disability, depending on the underwriting guidelines of the insurer. To avoid being declined, applying for a LTC insurance plan before a diagnosis will ensure receiving coverage.

Choose the Right Long-Term Care Insurance Plan For You

Adding a long-term care insurance plan is a crucial part of planning for retirement. A licensed HealthMarkets agent can help you calculate your coverage needs, find a plan that fits into your budget and give you greater piece of mind in your retirement planning. Find your local licensed agent today.



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