Over The Hill: Long Term Care Insurance

BOSTON (CBS) – At 55, do you need Long Term Care Insurance? I don’t know! I do know that only about 4% of our elders do reside in a nursing home.

And I do know is that 15 years ago there were over 100 companies selling long term care insurance and now about 15 or so. Why? Because they couldn’t make money on it. Their actuarial data underestimated payout risks.

Insurance companies are now selling some hybrid products. You can purchase life insurance with a long-term care rider. But you need to buy a lot of life insurance. And companies are raising rates on their current policy holders.

Long term care insurance covers nursing home care and maybe home care for those individuals who cannot perform the activities of daily living referred to as ADLs. These activities are bathing, dressing and grooming. The activities that allow someone to live independently.

So, the big question is, do you need it? I don’t know! According to Genworth Financial’s 2016 Long Term Care Survey, the national average annual cost of a semi-private room in a nursing home is $82,125, with it costing $135,000 here in Massachusetts.

Recently some studies indicated that it almost didn’t matter when you purchased the insurance for the pricing came out about even. If you bought the cheaper policy at a younger age versus the more expensive at an older age the premiums ended up costing about the same if you used a targeted nursing home date. Why? Because you pay the cheaper premiums longer. But as you age you do take on the risk of being uninsurable.

If you have some assets to protect like your home and a stock portfolio you may be a good candidate for long term care insurance. If you are poor or very wealthy you probably don’t need long term care insurance. The wealthy can self-insure and the very poor will be eligible for Medicaid.

The majority of people purchasing long term care insurance buy this product when they are in their late 50s. About the same time, they realize that getting up out of a sitting position takes some thought.

One more thing: About 4% of our elders are in nursing homes and most of those are women over 85. Women tend to outlive men and often times take care of their husbands and then have no one to care for them.

Uncle Sam is encouraging you to purchase long-term care insurance. Part of the cost of the premium will be treated as a medical expense and will be deductible if you are over age 40. The benefits will be generally excluded from gross income. The government would like to get out of the business of funding long-term care through the Medicaid program.

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You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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Comments

One Comment

  1. Matt McCann says:

    Insurance companies left the Long Term Care market because of lack of market share, not unlike any industry at it matures. Most long-term care is not in a nursing home … but at home, adult day care, assisted living or memory care. The US Department of Health and Human Services say if you reach the age of 65 you have a 7 in 10 chance of needing some type of extended care service. Having affordable LTC insurance will safeguard your 401k, IRA 403b and reduce the burdens extended care places on your family.

    Massachusetts does not participate in the federal long-term care partnership program; however, it offers special benefits if you own a qualified Long-Term Care Insurance policy. If you own a long-term care insurance policy that meets coverage requirements, you can be exempt from some MassHealth eligibility and recovery rules. These rules determine whether your home will need to be sold in order for you to become eligible for MassHealth benefits, and/or whether you or your estate may need to repay MassHealth for any of the long-term care expenses it paid on your behalf.

    Most other states provide dollar-for-dollar asset protection with partnership qualified plans. If you have a Health Savings Account you can use pre-tax money to pay for premiums if you are unable to deduct your premium.

    These policies are easy and affordable asset protection which also make it easier on your family. http://longtermcareplanningnews.com/articles/long-term-care-insurance-has-positive-impact-on-families-assets

  2. In case you’ll need it and you didn’t buy, who is going on the losing end? It’s you and your family. People are living much longer today, which makes them more at risk of requiring any form of long term care. Aside from this pressing need, the cost of long term care makes retiring scary, which makes people think if they should purchase long term care insurance. To help you answer if you should get long term care insurance, here’s an infographic about ten reasons why you should buy long term care insurance: http://boston.cbslocal.com/2017/08/09/over-the-hill-long-term-care-insurance/.

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