Isn’t Long-Term Care Expensive?

Long Term Care Insurance


Long Term Care Insurance can Protect your Long Term Financial Future

Long Term Care Insurance may be the least expensive and best way to protect your family and your assets.

Why Buy Long Term Care Insurance (LTCi)?

To protect your assets, minimize your dependence on other family members, and control where and how you receive long term care services.

What is Long Term Care?

Long-Term Care encompasses medical and support services for people with a degenerative condition (e.g. Parkinson’s, stroke, etc.), a prolonged illness (cancer) or cognitive disorder (Alzheimer’s). Long Term Care is not necessarily medical care, but ongoing “custodial care”, needed to perform some of the usual Activities of Daily Living (ADLs) due to illness or injury, or supervision needed due to Dementia or Alzheimer’s.

Long Term Care Costs can be Expensive

Prices for long term care services vary according to the type of service needed, how often and for how long you need it, as well as, where you live. The 2007 National Average for a private room in a nursing home is $74,8061. (Genworth Financial 2007 Cost of Care Survey.) Even home care and home health aide services add up quickly.

According to AARP’s 2007 statistics, the average U. S. costs are:

  • $5,566 a month for a semi-private room in a nursing home = $66,792/year
  • $6,266 a month for a private room in a nursing home = $75,192/year
  • $2,968 a month for care in an assisted living unit = $35,616/year

Costs Can Add Up Quickly

For example, if you have a home health aide assist you with bathing three times a week, you’ll pay, on average, $19 per hour (possibly with a 3 hour minimum) or $57 x 3 days = $171 a week. This would amount to nearly $9,000 a year just to get a bath!

How are Long Term Care Services Provided?

Long term care services may be provided in your home, in a family member’s home, at Adult Day Care, at an Assisted Living facility or Convalescent Care, Custodial Care or Skilled Nursing facility.

How Will You Pay For Long Term Care Insurance?

Many people think that Medicare or private health insurance will pay the costs, but Medicare and private health insurance, including MediGap, don’t pay for much, if any, long term care coverage.

Medicare

Medicare pays extremely limited benefits for medically necessary skilled nursing care in a facility or at home; for up to 100 days following at least 3 days in the hospital. Medicare does not pay for Custodial Care. The Original Medicare Plan (pages 53-55). You pay $0 for days 0-20; $124 / day for days 21-100 and; 100% beyond day 100. (2007)

Medicaid

Medicaid is a federal and state funded program which helps low-income individuals and families pay for some or all of their medical bills. Medicaid may help pay for nursing home care and sometimes services at home. People whose income is higher, but who have high medical or long term care bills can also become eligible for Medicaid. You must meet eligibility criteria, and income and asset rules apply.

Veteran’s Affairs

Veteran’s Affairs may provide long term care for service-related disabilities or for certain eligible veterans. Veterans who do not have service related disabilities, but who are unable to afford to pay for long-term care, are also eligible for assistance.

Personal Assets

Funding your long term care personally may be appropriate if you can absorb an additional expense of $50,000- $100,000 or more for 5-10 years without depleting your assets.

Who Can Purchase Long Term Care Insurance?

Reasonably healthy individuals and couples in their 80s may be candidates for LTCi. Quite often one or more of “the kids” will pay all or part of the LTCi premium for the parents. It may not be feasible for an incapacitated parent to move in with the child’s family. LTCi would protect the child’s savings, or the grandchildren’s college fund, at a fraction of the cost of nursing home care.

Long Term Care Insurance can Protect Your Future

Soaring health care costs, increasingly restricted coverage and eligibility, and the need to stretch retirement savings through more years are all reasons to consider LTCi. IPS Advisors represents a number of high quality LTCi carriers and can design and customize your LTCi policy to maximize your coverage and lower your premium as much as possible.

IPS Advisors can help you with the following:

  • Individual or Group Coverage
  • Traditional or Asset-based
  • Corporate paid LTCi for selected executives

This material is for informational purpose only and is not meant as tax or legal advice. Please consult with your tax or legal advisor regarding your personal situation. NFP does not provide legal or tax advice.

Due to the relatively short period of time the life settlement market has existed, the market is currently loosely regulated and the number of bidders for any marketed policy may be limited. Prior to selling a policy, the insured should consider factors such as the continued need for insurance coverage, whether there are plans to replace the existing policy with another policy, how the sale of the policy will impact estate plans, and the availability of new insurance as well as the cost of comparable coverage. Where relevant, tax implications must also be taken into consideration.

Loans and withdrawals from insurance policies may generate an income tax liability, reduce available cash value and reduce the death benefit or cause the policy to lapse. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax, a surrender charge, and if taken prior to age 59 ½, a 10% federal tax penalty may apply.

All guarantees are subject to the claims paying ability of the issuing insurance company.

To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

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