When Planning for Your Retirement, Do Not Forget Your Long Term Care Insurance

Posted in: Personal Insurance

We hear a lot about the importance of adequately planning for a successful retirement but there is often a hole left during this planning process when considering the cost of medical care. More than two-fifths (42%) of people age 65 and over have reported a functional limitation. Eighteen percent had difficulty with one to two basic activities of life (ADLs) [Source: 2009 Long Term Care Insurance Sourcebook, American Association for Long-Term Care Insurance]. Unfortunately these statistics prove that there is a high probability that you or a loved one will one day no longer be able to perform the basic activities of life and will need the extra care.

Why long term care insurance? How can it help me? And is it truly worth the cost?

Long Term Care insurance helps provide the cost of custodial care for a predetermined period, covering care that is generally not covered by health insurance, social security or Medicare. If or when you are in the position where you can no longer perform the basic activities of life (ADLs) such as bathing, eating, walking, transferring (getting in or out of a bed or chair), dressing, or toileting  and daily hands-on care is required, the costs can quickly multiply. In-home care can cost anywhere from $14 to $24 per hour. Sometimes it can be even more depending on the needs. And residential care can cost $48,000 to $96,000 per person per year depending on which community facility is chosen.

Long term care insurance can provide care in your home, assisted living, adult daycare or a nursing facility depending on your situation. Medical/health insurance, social security and Medicare do not cover this type of care whereas a long term care insurance policy can assist someone in paying for most or all of these costs.

In addition, a long term care insurance policy will protect your ability to get placement in an assisted living or nursing care facility or utilize a home healthcare agency. These types of residential care facilities and agencies are experiencing a greater demand as baby boomers are aging and people are living longer. This gives the facility and agency the ability to pick and choose the types of residents and/or clients they want to accept. An individual with long term care coverage means guaranteed payment. As the operating costs required to maintain proper care of their residents and clients continue to rise, a long term care policy will be even more attractive than cash, which has the potential of running out. A long term care insurance policy will ensure your care while also protecting your own finances.

How is long term care insurance determined?

Long term care insurance is determined by your age and health. The ideal age range to shop for and purchase your policy is mid-50s to early-60s. If you have a family history of any genetic disorders such as Alzheimer’s or Parkinson’s, you may want to consider getting coverage sooner.

Purchasing a long term care insurance policy will give you and your family the peace of mind that if you ever need long term care because you can no longer preform the basic activities of life, you will be cared for without medical bills draining your finances. As you can see, long term care is a vital part of retirement planning. I encourage you to contact Curt Wilkerson at Curtis@psafinancial.com or 443.798.7318 to discuss whether or not it should be part of your future plans.