TRUTH OR DELUSION?
What is expensive? I think the easiest way to identify relative expense is by comparing the purchase of long-term care insurance to the purchase of a car. Some people live in a city and a car isn’t necessary, so the cost is irrelevant. Let’s start with the first question; do you need a long-term care policy? Is long-term care too expensive to fund privately? Would a million dollars of out-of-pocket
costs be a perceived as a problem? Sound ridiculous? It’s not! One of my personal LTC clients received over a million dollars of benefits from their long-term care insurance policy and the family still had to supplement the expenses. Without a crystal ball to predict our need for care accurately, we need to objectively evaluate the risk relative to impact. None of us wants to plan on needing care. And few of us can imagine needing care for an extended period of time. Did you know that there are over 15,000 assisted living facilities and 46,000 nursing homes in Massachusetts and most are either full or have substantial waiting lists. Long-term care can be equated to a risky stock, such that when care starts, costs sends the stock plummeting with no base protection. When you run out of money, the state can require you to take money from your home and when you die, the proceeds from the sale repays Medicaid. This is why a long-term base policy is necessary. There needs be a stop loss, so protection, quality and choice of care can not only be afforded but provide the healthy spouse a chance of a quality lifestyle. A policy for that meets Massachusetts Medicaid lien protection, protecting up to $860,000 for your primary home, with total benefits of more than $187,000. This would cost just $100 month for a 55-year-old couple in standard health (health underwriting is required). For those who say long-term care is too expensive, it’s likely they were never educated on the value of this base
Let’s go back to the analogy of the car purchase. Once the decision is made to purchase a car, the decision changes to which car? Do we choose a less expensive car and know there are likely more out-of-pocket expenses due to ongoing repairs and hope there won’t be a catastrophic failure? Do we choose a more expensive car for the reliability, longevity or even the luxury items that make the car that much more enjoyable?
The same is true for long-term care insurance— once we decide we need it, we can choose the most effective policy to protect our home and provide us with the minimum coverage. Or, we can extend the benefits, duration and add riders to protect a greater portion for the lifestyle of our healthy spouse, insuring long-term quality of care, reducing anxiety for decision-making for the family and protect the estate for inheritance.
Deciding how much to purchase and how much to protect is based on understanding the costs of care. Costs of long-term care are based on age, gender, partner status, policy benefit, duration, shared riders, elimination periods, return on long-term premium options and terms of payment.
In Massachusetts – Cost of care averages:
Home Care: $28/hour and most agencies require minimums of 4-hour shifts costing $3400 a month with the cost doubling to $6800 a month when pm care is required as well.
Assisted Living: A one-bedroom averages $5900 a month
Nursing Home: A semi-private room averages $11,500 a month.
And of course, this cost increases every year.
Men: Averaging 2.2 years of care
Women: Averaging 3.7 years of care
Dementia – regardless of gender averaging 6 years
Questions to ask yourself are:
How long can you afford to self-pay for care?
When would the cost of long-term care impact the healthy spouse’s lifestyle?
How important is it to leave children or grandchildren an inheritance?
If your answer leads you to think more about long term care planning and looking into long term care insurance, visit www.LongLifePlanning.com. For more information and request a call back for specific quotes.