Long-Term Care

Do you need it? This can only be answered based on a clear understanding of your very unique situation. Take the time to study the issue before deciding. Be careful to avoid blanket statements like, everyone should do this or everyone should do that. No situation is identical. Think rationally when contemplating your options.


Why buy it? It can help preserve the money you have saved over the years (over 60% of people 65 and older have needed long-term care in the recent past). If you find yourself in a long-term care facility for an extended period of time, you could run through most, if not all of your money you have earmarked for retirement. The bottom line on buying is pretty simple. You want to preserve the money you have. You don’t want to end up broke.


Why to not buy it? It is very expensive. It can become more expensive over time (premiums will likely go up over time). You are self-insured (you have the money to pay for it). You have little in savings (you will go straight to Medicare when you run out of money). You may never use it. The insurance company may not fulfill all of the promises they have made when you signed up. The insurance company may go out of business and your policy can end up in limbo.


What is the best age to buy it? In many cases your late 50’s and early 60’s will be the most opportune time. Why? If you start too early you will probably encounter many changes that you will have to account for (it will start out cheaper, but you will pay for it over a longer period of time and remember, the premiums will very likely go up). If you wait too long, your health may go south and then it may not be available to you.


What are the basics? Long-term care insurance kicks in when 2 of 6 of your daily living activities cannot be completed. They are eating, bathing, dressing, toileting, walking, and continence. Medicare does not cover custodial care at home, assisted living, and nursing home care. Either you pay for it out of your own pocket or you buy long-term care to cover the costs IF you need it. Will you need it and how much will it cost? Those are difficult questions.


Bottom Line: Get a plan. Either self-insure or buy long-term care if you have the money. If you don’t have much money, do not waste your time on long-term care. Medicare will kick in when your limited amount of savings runs out. Companies like AALTCI.org, LTCTREE.com and PrepSmart.com are good starting points when using an independent agent. There could be better deals beyond your local community. Consider a 5-year period with a 6-month waiting period upfront rather than a policy that will cover you for a lifetime. The premiums will be much lower and most long-term care periods last less than 5 years (play the odds). Consider inflation adjustments when possible, but remember that will raise the cost of the policy.