Simplifying Long Term Care Insurance

Written By: Barbara Maietta, CFP® & Linda Thalheimer CLTC, RICP, LIA

“Don’t complain about growing old, it is a privilege denied to many”  – Mark Twain

What is Long-term Care?

Long-term care refers to help with daily living for people who can’t fully care for themselves. Long Term Care is defined as requiring assistance with 2 of the 6 daily living skills:

• Bathing
• Dressing
• Toileting
• Transferring
• Continence
• Feeding

OR evidence of a severe cognitive impairment requiring substantial supervision. 70% of people will require long term care services due to illness, injury, or aging. Most of that care is provided by families.

How does Long-term Care Insurance Work ?

Long-term care insurance can be purchased by an individual, a couple or an entity such as a business or a trust.  When an insured meets the eligibility criteria noted above, the company pays a daily or monthly benefit, with an inflation option, for a specified duration of time to offset the cost of care.

The average cost of private care provided in the home in Massachusetts is $40 per hour, or $9,600 per month for 8 hours a day. While many couples prefer to remain at home, these costs can become overwhelming, leading some to consider assisted living, which averages about $8,000 per month. Beyond cost, assisted living can offer other benefits: social connection, organized activities, exercise, entertainment, and reducing the uncertainty of a caregiver not being available.

Three Major Types of LTC Insurance Policies

The three major types of LTC Insurance are Traditional, Hybrid (a combined LTC with a Life/Annuity Policy), and an Annuity with LTC rider. There are many features available for each of these including cash or reimbursement payments, zero- or 90-day waiting periods and inflation protection.

Traditional Policy

• Annual/Monthly premiums until benefits are received or death
• Most cost-effective for shorter duration periods
• Option to qualify for MA Lien protection

Hybrid Policy

• Premiums usually paid for 10 years
• A death benefit (DB) is paid if no LTC claims are paid
• DB is related to the premiums paid
• Options for Cash & International Coverage

Annuity Policy

• Single premium receives up to 3 times premium in benefit
• Benefit grows 2% a year
• Potential for higher DB
• Cash Benefit
• Good for older ages 70 – 80 or impaired risk

How Do I Learn More About LTC Insurance?

To learn more about LTC insurance, visit www.longlifeplanning.com.  Purchase of a LTC insurance policy is an important decision with both short and long-term impact on your financial plan.  We recommend talking with your Financial Advisor before making this investment.