Long Term Care
According to the U.S. Department of Health and Human Services, people age 65 have at least a 40 percent chance of entering a nursing home sometime during their lifetime. Assuming the average stay in a nursing home is three years, costs can easily surpass $200,000 for the entire long term care event. In 20 years, the average cost for 3 years of care in California is expected to be in excess of $600,000.
A common misconception is that Medicare will generally cover most LTC expenses that one might incur, however it typically does not. Medicare does pay for some nursing and home health-care expenses, but the services must be short term in nature and medically necessary. Furthermore, Medicaid withholds paying for care until personal assets are depleted to no more than $2,000.
Most people of moderate resources personally pay for long-term care expenses as they arise, either from family assets or with long-term care insurance. Others assume that their children will be able to provide them care if they become incapacitated. When this is feasible, there is a significant impact of loss of income and savings to the caregiver that needs to be considered.
Long-term care insurance is designed to be flexible in regards to where you can control the costs relative to the benefits you choose. Annuity-LTC hybrid products can be a great option available to clients as well. When deciding on a policy, there are several benefits you should compare within the several different types of policies available. Policies have different limitations and exclusions, including what the policy pays per day/month, the length of time the benefits will last, the maximum benefit allowed for a lifetime, the waiting period, the types of facilities covered, and the cost of the premiums. Additional features include cash indemnity, return of premium, and reimbursement to qualified family members who undergo personal care training. A portion of premiums may also be tax deductible.
LTC insurance is a vital part of your overall financial plan, with a compelling reason being the protection of the savings and assets it took you a lifetime to build for you and your family. If you already have long-term care insurance, review your policy to be sure it meets your needs. Alamo Capital advisors are available to help you find the best policy depending on your personal financial situation.