Long term care challenges impact women both as caregivers and recipients of care. In a recent webinar titled Women and Long Term Care, we reviewed these challenges with a panel of women long term care experts who offered solutions for ways that women could navigate the complexities of caring for a loved one and planning for their own care.
After we presented the challenges, it was clear that creating a personalized long term care plan could provide women with much deserved peace of mind. We were thrilled to receive as many questions as we did about the topic and many of them centered around long term care planning. We’ve provided some of the top questions in this article.
The long term care planning process is personal and it’s important to understand what options are available to you and what the long term care planning process involves. Here is the recorded webinar.
At what age should I purchase long term care insurance?
A: This is always one of the questions we are asked the most and the answer is not as simple as the question may sound. Many people wait to purchase LTCi until the ages of 40 to 65, and some purchase after they have had a personal experience with a family member who required care. However, the sooner you decide that long term care planning is right for you, the more options you generally have and the more affordable the coverage. That’s not to say that people at the older ages don’t have options. A good long term care specialist can help you determine what is available for your situation.
How do we pick the right insurance company?
A: Insurance companies are regulated by each state in which they do business. The best approach is to speak with a long term care specialist about your needs and your budget. The specialist will make recommendations about products that might be a good fit for you and they can provide information on the carriers. Insurance companies are regulated by each state in which they do business. They are also rated by independent agencies such as AM Best. You are encouraged to do your own research on any company that you might be considering.
Can you explain the difference between hybrid and traditional or standalone long term care insurance?
A: Long term care insurance was created with the specific purpose of providing a pool of funds that can help pay for long term care costs. Traditional long term care insurance typically works like auto or home-owners insurance where you pay a recurring premium with the objective of getting the maximum risk protection in the future. You hope to never use the policy, but if you do, most of your premiums go toward the LTC coverage. You generally don’t receive money back if you don’t need long term care services.
Hybrid or Linked Benefits plans provide long term care benefits that are usually linked to a life insurance policy or an annuity, and premiums are often paid as a lump sum or over a specified number of years. Hybrid products have become popular as more options have emerged to fill gaps in the standalone market. Pricing and insurance leverage has become more competitive in the Hybrid market over recent years. Hybrids may offer guaranteed premiums, guaranteed LTC benefits, cash indemnity benefits, and even a significant life insurance or annuity benefits if long term care is not needed. Hybrid plans can be appropriate for people with health issues but may also be used in some cases together with a traditional plan. Here is more information on planning for LTC when you have a health issue.
Sometimes all of these extra features are not a significantly higher cost for the same level of LTC benefits as a standalone policy. As usual, a specialist can help you shop the market to find the best value for your situation.
What does it mean to self-insure?
A: Self-insuring is also known as self-funding, and it means that the person receiving care will cover some or all long term care costs out of pocket through income or savings. One of the challenges with this approach is that the cost of care in the future can quickly drain savings. Once you exhaust savings, you are left with few options outside of Medicaid. Insurance can offer a larger pool of funds that can protect your savings, relieve your family members of the burden of caregiving, and provide you with many more options that may include home health care.
What is the minimum and maximum policy you can purchase?
A: That depends on your own situation and what you want to achieve with your long term care plan. As a general rule, you will first want to do an analysis of your needs and the cost of care today and in the future with inflation. Here is a popular cost of care survey. Most people choose between $3,000-$9,000 per month as a starting point ($100-$300 per day) depending on their budget for insurance and the cost of care. Then, they determine if they want the benefits to grow and how many years of coverage they desire. Often, these choices are based on how attractive is the pricing of the insurance along with personal experiences in their own family with long term care needs and the quality of care they desire. For those willing and able to pay out of pocket, insurance can be a supplement to self-funding. The best insurance plan for you is one that you can afford over the long term.
Is there protection against inflation?
A: Yes. Many policies offer compound inflation protection as an added rider to the policy. Inflation protection options may be higher or lower depending on what the carrier offers and what you feel you can afford. Inflation growth is important because given the shortage and cost of quality care providers, we expect that the cost of care will continue to increase faster than general inflation.
My husband and I are 50 but concerned about keeping up with the premiums. What type of monthly or annual premiums can we expect in the future?
A: The beauty of creating a long term care plan is that the cost of insurance can be tailored to your budget. That means that long term care insurance may be more affordable than you think. The key is to understand how much total insurance benefits you are receiving for your premiums in the future when you are most likely to use the coverage.
We find many clients paying as little as a few hundred dollars in premiums or less per month. However, more often clients will buy more coverage if the product value is expected to cover the cost of care more fully. It even makes great financial sense to pay higher premiums now but pay over fewer years with a limited pay policy, so that you can pre-pay or lock in the rates.
The best way to understand what is best for your situation is to calculate your total premiums and compare to your total policy benefits in the long run.
What if I move or I’m traveling? Are policies good in every state?
A: Yes. Private long term care insurance offers national – and in some cases, international – portability of your benefits. Be sure to let your long term care specialist know if you have plans to move out of state or travel extensively, and he or she will find you a plan that will follow you.
What is the process for filing a claim?
A: A claim can be filed after a physician has determined that the covered person cannot perform two out of six activities of daily living (ADLs). Make sure to go through the policy to determine if there is an elimination period (deductible) which is commonly 90 days or less. You can file your claim with the insurance company as soon as it is determined that long term care assistance is needed. Make sure to respond promptly to all requests for information completely and accurately when you speak with a claims representative.
BuddyIns has relationships with community partners who are long term care claims advocates. If you feel you need help with a claim, please click here for more information.
We would love to provide more information and resources about long term care planning, caregiving, and tips on healthy aging.
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