Long-Term Care Insurance

The cost of care in a nursing facility continues to rise.  The cost of the same is dependent upon the location, the level of care provided and the needs of the resident.  I have seen monthly care statements in excess of $10,000.  So, if you should need this type of care, will you be able to afford it?

One way to help with future needs is to have Long-Term Care Insurance.  This can provide for care not only in a facility, but also, if you need care while living at home.  The coverage can vary by policy, but it is well worth consideration. 

The younger you are when you purchase LTC insurance, the cheaper it will be.  If you are age 50, you should certainly think about it.  Being of a certain age, say mid 60’s, or having developed a chronic condition may deem you ineligible for LTC insurance. 

There are two major types of LTC insurance – stand-alone policies and hybrid policies.  The stand-alone policy is a “use it or lose it” option and usually provides the most coverage per premium dollar.  A hybrid policy combines long-term care insurance with a fixed annuity or life insurance policy.  With a hybrid policy, if premiums are paid but there is no need for a claim, the premiums are applied to provide life insurance coverage for the insured’s beneficiaries with a guaranteed payoff at death.  Hybrid policy premiums fund both the LTC insurance and the life insurance, so they tend not to provide the same benefits as a stand-alone policy.

When shopping for LTC insurance, it is important to understand the details of an elimination period – the length of time the insured must self-insure before the benefits will be paid.  Does the company issuing the LTC insurance have the option of two spouses being on the same policy or can they use the other’s policy if needed?  Also, another question to ask is whether the company offers a “pay up” option that allows for the premiums to be fully paid upon retirement which would give the insured the deferral of the premium from their salary. 

Happy LTC planning. 



About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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