What is Traditional Long-Term Care Insurance (LTCI)

Long-Term Care Insurance (LTCI) pays for care when you are unable to care for yourself, usually due to a chronic illness or injury. Your need for long-term care insurance is normally based on your inability to perform two of six Activities of Daily Living (bathing, continence, dressing, eating, toileting and transferring) expected to last for 90 days or more, or due to a cognitive impairment (dementia or Alzheimer’s).

What Does Long-Term Care Insurance do for you?

A Long-Term Care Insurance (LTCI) policy can provide choices for you and your family in case you suffer from a long-term illness or injury. It can help you maintain your independence. It is issued from an insurance company and it can help protect your life savings by transferring the risk of paying for long-term care to an insurance company. : LTCI pays a set dollar amount for your care every day, week or month, depending on your policy. You can choose if you get care at home or through a facility of your choice.

But what if I die and I never use it?

When you buy a traditional long-term care insurance policy, it is like homeowners or automobile insurance. If you purchase auto insurance and never use it, the premium is gone. If you buy homeowners insurance and your home never burns to the ground or is robbed, the premium is also gone. To solve this dilemma, insurance companies have begun to offer a variety of insurance products with long-term care insurance riders.

But what if you need it?

If you are one of the unlucky ones that need long-term care, how will you pay for it? Probably the answer is, "Out of my life savings". It seems like the better choice is to spend a small amount today to cover that large amount tomorrow.

Why is LTCI important?

Nothing can derail a successful retirement plan faster than a prolonged sickness or injury. Once the Medicare care limits are exhausted, or if you are no longer able to recover, you may find yourself paying for the care on your own. Health insurance and Medicare do not fully cover long-term care. If you are lucky, you may get a few months of care paid for before you need to pick up the tab out of your own pocket.

Medicare is not the solution to paying for your Long-Term Care

In the guide, Medicare & You 2018, on page 60, explains Medicare is not the long-term care insurance solution for you when it says, “Medicare and most health insurance plans, including Medicare Supplement Insurance (Medigap) policies, don’t pay for this type of care, sometimes called “custodial care.” You may be eligible for this type of care through Medicaid, or you can choose to buy private long-term care insurance.”

Medicaid is for the poor

If you are on welfare, or otherwise lack the financial resources to pay, Medicaid is available if you qualify. However, you may need to spend down your savings to qualify. The choice of the facility where you will get your care at will be up to Medicaid to choose, not you. You might also be able to qualify for Medicaid if you exhaust the coverage from a qualifying partnership long-term care insurance policy.

You can pay for your own care too

If you are very wealthy, you may be able to afford to cover the high costs of care for yourself. Otherwise, take a look at the recent Genworth cost study (Genworth 2017 Cost of Care Survey, conducted by CareScout®, June 2017) and ask yourself, do you have that kind of money laying around?

Insurance products with long-term care insurance riders

As an alternative to paying a regular premium to a traditional long-term care insurance policy, you might consider another type of simplified issues insurance product with an LTCI rider. You need to answer a few questions and be approved by the insurance company, but the benefits are received tax-free. There are some good reasons you might want to adopt this approach including:

• It is purchased with a single premium or a cash value transfer.
• You maintain access to the cash value.
• When you die, your heirs will inherit the cash value or death benefit, less any long-term care benefits you receive.
• You are concerned about paying for coverage that you may never need.
• Have limited dollars to spend on a variety of insurances.
• Have significant cash values in existing non-qualified insurance products that could be transferred into an annuity with long-term care coverage.
• Are concerned that your premium on a traditional long-term care insurance policy could go up.

And if your health is impaired?

If you are not healthy and cannot qualify for a simplified issue insurance product, another choice is to add a confinement care income rider to an alternative insurance product. The confinement care payout is usually limited to up to 200% of your deposit. Unlike a simplified issue plan, confinement benefits are taxable when received.

And then there is the Combo Plan

You do not necessarily need to choose only one way to plan for a chronic illness or injury. You can use a combination of approaches You can use more than one approach to plan for your independence in the event of a chronic care need.

In Conclusion:

We have been helping people like you find the right long-term care insurance since we started in 1998. There are many ways to plan for and maintain your independence in the event you need care due to a chronic illness or injury. There are many reasons you should consider a long-term care insurance plan. You can choose more than one way to provide yourself with choices in case you need them in the future.

Finally

If you have any questions about the Long-Term Care insurance (LTCI) or LTCI insurance riders or just need a little guidance, feel free to contact us. We know long-term care planning can be confusing, so it is important to get the facts before you make any long-term decision.