Understanding Long Term Care Insurance

Long term care insurance is an optional insurance that can be purchased to supplement your primary insurance. Long term care insurance is designed to help cover costs for long term care, from home care services to assisted living. This post will cover the benefits of long term care insurance, when to consider purchasing, a cost comparison, and next steps if you choose to buy a policy.

What Is Long Term Care Insurance and Who Needs It?

Typical health insurance, which is often tied to employment, follows the same guidelines as Medicare when it comes to long term care coverage, they only cover medically necessary, short term care. This is where Long Term Care Insurance, or LTCI, can comes into play.

Long term care insurance may be appropriate for any aging adult. While it can be purchased at any point in adulthood, the American Association for Long Term Care Insurance recommends purchasing LTCI in your 50's. Reference this chart from Generally, the sooner you purchase, the smaller your annual premium will be! Inflation protection can be added to the policy to help cover any gap in cost from the time when the policy was purchased to the time when benefits are received.

Benefits of Long Term Care Insurance

Flexibility in care options: Typical health insurance will typically only cover long term care if it is medically necessary. LTCI gives you the ability to choose to use your benefit package toward non medical personal care. Policyholders may choose between in-home care, assisted living, or nursing facilities to suit their changing needs as they age

Preserving independence and quality of life: LTCI gives policyholders access to a variety of care options designed to preserve their independence throughout the aging process. Levels of care change as we age, and Long Term Care Insurance is designed to change with you.

Peace of mind for policyholders and their families: Knowing you are covered by a long term care insurance policy can ease stress for policyholders and their family members as they age. LTCI ensures that you or a loved one will be able to afford the care you need.

Comparing Costs

Without a long term care insurance policy, home care aides, assisted living, or nursing home costs can be exorbitant. According to SeniorLiving.org the national monthly median cost for 8 hours of daily personal home care is $6,481. Median monthly rent at an assisted living can be similarly priced at $6,077. The median cost of a nursing home, depending on room type is $9,555 to $10,965 per month.

Now let's look at an example of monthly premiums for men and women for a $160,000 benefit, without inflation protection, based on what age the policy is purchased. Women have a higher monthly premium due to a higher life expectancy. Married couples can typically combine policies and receive a discounted rate.

Age	Man	Woman
55	$79	$125
60	$100	$158
65	$142	$225
70	$172	$300

Figures according to American Association for Long Term Care Insurance's 2024 index.

When comparing long term care insurance average monthly premiums to average monthly costs of care that is covered, LTCI is a great investment.

Buying Long Term Care Insurance

You have the option to buy a policy directly from a licensed insurance agent, broker, or financial planner. Additionally, if you are employed, your employer might provide the opportunity to obtain this type of coverage.

If available in your state, you may also acquire long-term care insurance through a state partnership program. These programs enable you to purchase a shorter-term policy, and if you use up your benefits, you might qualify for Medicaid assistance while safeguarding a portion of your assets.

Conclusion

In conclusion, long term care insurance serves as a vital financial safety net for individuals and families as they navigate the complexities of aging and healthcare needs. By providing flexibility in care options, preserving independence, and delivering peace of mind, LTCI can significantly alleviate the financial burden associated with long-term care services. Given the rising costs of such care, investing in a long term care insurance policy early can lead to substantial savings and better preparedness for the future. Ultimately, securing long term care insurance can enhance quality of life and ensure that individuals receive the care they deserve without depleting their financial resources.