Long-term care insurance is a critical consideration for individuals planning their financial future, yet many misconceptions and uncertainties surround it. Recently, I hosted a webinar to shed light on this essential topic, providing valuable insights into the intricacies of long-term care insurance. Here are the seven key takeaways that emerged from our discussion:
- Medicare Coverage Limitations: It’s vital to understand that Medicare does not cover long-term care expenses such as assisted living, home health aides, or nursing home care. While Medicare may provide limited coverage for rehabilitation following a hospital stay, this coverage is restricted to 100 days and can be challenging to qualify for.
- Qualifying for Long-Term Care Insurance: Long-term care insurance can step in to cover expenses that would otherwise come out of pocket. To qualify, a healthcare provider typically must certify that an individual cannot perform at least two out of the six “activities of daily living,” or that they have been diagnosed with a cognitive impairment.
- Rising Costs of Care: The cost of long-term care is escalating rapidly. In regions like the Greater Boston area, nursing home care can amount to approximately $15,000 per month, while home health care and assisted living facilities may cost around $8,000 per month.
- Inflation-Adjustment Riders: Within a long-term care insurance policy, an inflation-adjustment rider can be crucial. Commonly, policyholders opt for riders with 2-3% compound inflation adjustments, though this can vary based on factors such as location and age at the time of policy purchase.
- Health as a Determinant for Qualification: The primary factor influencing qualification for a long-term care insurance policy is an individual’s health. Generally, individuals apply for coverage in their 50s or early 60s, with those with a family history of cognitive degeneration often opting to apply earlier.
- Hybrid Policies: Hybrid policies, which combine long-term care and life insurance, offer unique benefits. These policies typically guarantee premiums and may include provisions such as indemnity, where benefits are paid automatically each month without the need for receipt submission.
- Suitability Across Wealth Ranges: While long-term care insurance is often associated with individuals possessing wealth in the range of $1 million to $10 million, it is essential to recognize that there are numerous non-financial reasons to consider purchasing such coverage. Even individuals of significant wealth, such as Bill Gates, have recognized the value of long-term care insurance.
Thank you to all who attended our webinar. We hope it was insightful and will enable you to make more informed decisions in the face of potential long-term care needs. Please get in touch if you would like to learn more.
