LTCI: Just The Facts, Please

Long-term care insurance is not exactly new or news, but we are hearing a lot more about it lately simply because we are living longer.  The longer we live, the older we get, the better the odds that we will need long-term care.  And not only are we living longer, advances and developments in medicine and health care mean we do not have to end up in nursing homes to receive that care.  With the right system in place, we can stay in our homes while being looked after – a terrific option.

The fastest growing group in America is people over the age of 85.  That’s 85!  There is every reason to believe that by 2040, based on current research and population studies, we will have more than one million Americans over the age of 100 still enjoying their healthy independence.  But independence does not necessarily mean doing it all without help.

You know how the numbers work: if you make it to age 65, you will probably see 82 or 83.  Should you get to age 75, you are likely to reach nearly 87 – statistics work in interesting ways.  The point is, sort of, the longer we live, the longer we live!

Okay.  We are living longer, we hate the thought of a nursing home, the situation in Washington as far as Social Security and Medicare is seriously worrying.  What can we do?

Start looking into long-term care insurance plans.  Remember you will need to health-qualify – and good health will get you a discount from most carriers, perhaps as high as 10% to 20% per year.   Here is a breakdown of percentages by age of those who qualified for good health discounts in 2008:

  • Under 30: 63.2%
  • 30 to 39:   66.3%
  • 40 to 49:  66.8%
  • 50 to 59:   51.5%
  • 60 to 69:   42.2%
  • 70 to 79:   24.2%
  • 80 and over: 12.9%
The first thing this list tells us, of course, is that the younger we apply the better.  We don’t want to think about LTCI until we need it, but by then our health may well be compromised.   Starting the process in our 40’s is really smart, but even in our 50’s, we have a decent chance to save some premium dollars.  Many carriers offer discounts to married adults and even to unmarried adults who live together.  And some companies offer discounts to domestic partners or those in committed relationships.   There are options for sharing care, giving couples access to a pool of money to work with, especially helpful when cost is an issue (and it usually is!).  Indeed, nearly 75% of long-term care insurance policies are purchased by couples.
Another way to trim the cost a bit is to add a ‘deductible’ – or, in the case of LTCI, to stretch out the elimination period.  The elimination period refers to the number of days you fully pay for your care yourself until your benefits begin.  Maybe family or friends can pitch in at the beginning; perhaps there are church or community resources that you can use.
A defined benefit period is also a way to save some money and still protect yourself and loved ones.  There is no way to predict precisely how long you will need care and the ideal solution would, of course, be to opt for ‘unlimited’ benefits.  But fewer than 20% of the present LTCI policyholders in this country have lifetime benefits.  This option is very expensive, too expensive for many of us.
You might think about the assets you are trying to protect with your long-term care insurance as you plan.  From there, settle on a daily dollar amount and then select the number of years you want coverage.  A policy that pays 3 years will save 36% to 39% per year compared to an unlimited benefit; a 5-year policy will save somewhere between 16% and 27%.  Most individual purchasers of LTCI opt for limited duration policies, with more than half choosing plans with benefit periods of four years or less.  Try not to be ‘all or nothing’ in your thinking, here.  Some help is far, far better than none.  If you can’t pay for five years of benefits, go for three.  Just get a plan in place.
And as more and more Americans purchase LTCI, plan design and development gets better and better – a very good thing.  Between evolving plan design and your creative, resourceful thinking, surely there is a way!

One response to “LTCI: Just The Facts, Please

  1. Pingback: How To Plug A Hole In Your Long Term Care Insurance Plans | TIB Tips

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