The longer you live, the greater the chances you’ll need some form of long-term care. If
you’re concerned about protecting your assets and maintaining your financial
independence in your later years, long-term care insurance (LTCI) may be for you.
Who needs it?
As we age, the odds increase that we’ll need some form of long-term care at some point
during our lives. And with life expectancies increasing at a steady rate, the likelihood of
needing long-term care can be expected to grow in the years to come.
But won’t the government look out for me?
Medicare pays nothing for nursing home care unless you’ve first been in the hospital for
3 consecutive days. After that, it will pay only if you enter a certified nursing home within
30 days of your discharge from the hospital. For the first 20 days, Medicare pays 100
percent of your nursing home care costs. After that, you’ll pay $204.00 in 2024 per day
for your care through day 100, and Medicare will pick up the balance. Beyond day 100
in a nursing home, you’re on your own–Medicare doesn’t pay anything.
If you’re at home, Medicare provides minimal short-term coverage for intermediate care
(e.g., intravenous feeding or the treatment of dressings), but only if you’re confined to
your home and the treatments are ordered by a doctor. Medicare provides nothing for
custodial care, such as help with feeding, bathing, or preparing meals.
Medicaid covers long-term nursing home costs (including both intermediate and
custodial care costs) but only for individuals who have low income and few assets
(eligibility guidelines vary from state to state). You will have to use up most of your
savings before you qualify for Medicaid, and aside from a small personal needs
allowance, you will have to use all of your retirement income, including Social Security
and pension payments, to pay for your care before Medicaid pays anything. And once
you qualify for Medicaid, you’ll have little or no choice regarding where you receive care.
Only facilities with Medicaid-approved beds can accept you, and your chances of
staying in your own home are slimmer, because currently most states’ Medicaid
programs only cover limited home health care services.
Looking out for yourself
If you want to retain your independence, protect your assets, and maintain your
standard of living while at the same time guaranteeing your access to a range of
long-term care options, you may want to purchase LTCI. This insurance might be right
for you if you meet the following criteria:
● You’re between the ages of 40 and 84
● You have significant assets that you would want to preserve as an inheritance
for others or gift to charity
● You have an income from employment or investments in addition to Social
Security
● You can afford LTCI premiums (now and in the future) without changing your
lifestyle
Once you purchase an LTCI policy, your premiums can go up over time, but the rates
can only rise for an entire class of policyholders in your state (i.e., all policyholders who
bought a particular policy series, or who were within certain age groups when they
bought the policy). Any increase must be justified and approved by your state’s
insurance division.
Several factors affect the cost of your long-term care policy. The most significant factors
are your age, your health, the amount of benefit, and the benefit period. The younger
and healthier you are when you buy LTCI, the less your premium rate will be each year.
The greater your daily benefit (choices typically range from $50 to $350) and the longer
the benefit period (generally 1 to 6 years, with some policies offering a lifetime benefit),
the greater the premium.
Securities offered through IFP Securities, LLC, dba Independent Financial Partners (IFP), member
FINRA/SIPC. Investment advice offered through IFP Advisors, LLC, dba Independent Financial
Partners (IFP), a Registered Investment Adviser. IFP and Hitchcock Maddox Financial Partners are
not affiliated. This is for educational and information purposes only and is not research or a recommendation regarding any
security or investment strategy.