Long Term Care Insurance – Plan now for a little TLC through LTC
Hitting that century mark or even living well into our nineties is hard to fathom––so much so, that a lot of us are guilty of just ignoring the “what ifs” of making it that far in life. However, for women, facts show that we ARE living longer and longer. This is great news but living longer may create some pretty severe financial challenges. It’s a smart idea to put a solid long term care plan in place, either by saving for it or through long term care insurance planning … the sooner, the better.
Long term care (LTC) insurance is designed to pay for medical and non-medical expenses for individuals suffering chronic illness, disability, or simply the ravages of old age. It’s important to know that Medicare does not cover personal needs (also known as custodial care) such as help with dressing, bathing, using the bathroom. Long-term care insurance takes care of both health and personal needs. Therefore, LTC can make sense as a supplemental insurance to cover daily care if you need help as you age.
Many see buying LTC as an added expense that, when you’re young and spry, just does not make much sense. But, if you consider the average annual cost of elder care, you may rethink the (much) smaller annual premium involved in owning a LTC policy.
- The average annual cost of Nursing Home care – $83,179
- The average annual cost of Assisted Living – $44,345
- The average annual cost of Home Care – $38,317
These costs are in TODAY’s dollars. With the average stay in a nursing home at around 3 years, the average cost per person is around $241,219. This theoretically could become the greatest financial risk of your life.
Typical Long Term Care insurance premiums average between $1,000 and $3,000 per year, depending on your age. But, there are a couple of moves you can take to keep your LTC premiums more affordable.
- Don’t wait. LTC premiums are based on age; therefore, buying your policy sooner than later will save you money. You can also purchase inflation protection, which will help keep your cumulative premium costs lower.
- Look into spousal discounts. If you’re married, you may be eligible for discounts. Depending on your insurance company, you may save up to 10% to 35% each year.
- Take advantage of tax deductions. Under current IRS guidelines, LTC premiums are considered medical expenses (tax-qualified policies only). Medical expenses in excess of 7.5% of your adjusted gross income can be written off as an itemized expense on your Schedule A.
- Pay once a year. Sending your premium payment in just once a year earns you a discount.
- Take care of yourself. As with most insurance-based products, your health will affect your premium. In the case of long term care, the effect is significant! So, once again, it can pay to look into LTC when you are younger (and healthier) to secure a better rate.
It is unforeseeable what future nursing home and assisted living costs may be…we would all like to hope that this is something we will never face. But, the facts are not on our side. Planning for it now––with a predictable annual LTC premium payment––may be a wise move to make.
As with all insurance and/or investment strategies, long-term care insurance does not make sense for everybody. But, if you are a woman, it’s well worth exploring. Give us a call at (866) 904-4700 to discuss your options.