We recently posted here about the importance of long-term care planning in case of the temporary or permanent need for long-term health care at home, in assisted living or in a nursing facility. As a follow-up to that post, today we will talk about long-term care insurance as a potential component of this planning.
Your employer may offer LTC insurance as part of a benefit package, likely through a group policy. You might need to pay premiums, but they may be relatively affordable if your employer subsidizes the policy. In addition, a policy through employment may not require that you undergo a physical examination to qualify for coverage, which can be an important opportunity if you have any pre-existing conditions that might disqualify you from coverage or raise your premiums, depending on the terms of the particular policy.
(The bar on considering pre-existing conditions that applies to health insurers does not generally apply to LTC policies.)
You can also shop for LTC insurance in the private marketplace. Other options to explore are a life insurance policy or an annuity that also offers some long-term care coverage, or a policy that allows spouses to share the same pool of LTC benefits or purchase some other configuration of joint benefits.
Usually, an LTC policy covers a maximum daily amount of care. For example, it could provide up to $300 per day of home services, nursing home charges, hospice care or other covered LTC services, often up to a policy maximum, say $400,000 over a lifetime.
It is widely reported that LTC policyholders are experiencing frequent and expensive premium increases. According to the Sacramento Bee, a California state insurance official explained that the industry did not accurately project the costs of LTC claims over time, given the increase in life expectancies and resulting higher costs of aging.
The article also explains that the rate at which LTC policyholders drop their coverage is lower than projected, leaving insurers with more financial responsibility for claims than expected.
Admittedly, the uncertainty of future premium hikes can be a factor to consider in the decision whether to purchase LTC insurance.
Consider your options carefully
While it may feel like a disconnect to pay premiums for long-term care insurance when you are relatively young and robust, an unexpected illness or accident can happen at any time. Everyone gets older and related physical and mental challenges can develop.
Having a policy in place can free up other assets to support your family or pay bills over and above what the policy covers. Having this coverage also can help alleviate the stress that your children and other family members will feel in such circumstances.
When you discuss your estate planning goals with your attorney, consider whether LTC insurance might be a good option for you.