When employees are in their 30s, job-hopping and looking for the organizations with the best salaries and benefits packages, long-term care insurance (LTC) is not usually on their minds.
But, the fact is, it should be.
Life insurance sales increased during the coronavirus pandemic. And it’s good that even younger employees started exploring their own mortality and ensuring their families are cared for in the event of their death.
But everyone, from company executives to hourly workers should also be considering long-term care insurance as an important part of voluntary worksite benefits or individual benefits.
I was fortunate when I was younger, being in the insurance industry, that I had mentors who explained why I should buy LTC in my 30s. I got in while rates were low.
I know the peace-of-mind it gives me, today, knowing that my family won’t have to worry about taking on the burden of caring for me in my later years or facing financial hardship if they have to pay for my long-term care.
However, not enough insurance brokers are selling this benefit to their clients. Either you haven’t heard enough about it or you simply don’t realize the importance of it. Unless you are caring for aging parents, you may not realize how much long-term care costs or how important it is to alleviate the challenge of caregiving on family members.
Rates have gone up since years ago and will continue to rise. The best time to buy LTC would have been a decade ago. The second-best time, as they say, is now. It’s simply an easier sell right now than it will be in the future when rates go up again.
Before we go further, let’s explore the basics of LTC and LTC insurance.
What Is Long-Term Care?
Long-term care describes physical assistance with the activities of daily living (described as ADLs by medical professionals) for an individual who is elderly, injured or disabled.
Individuals in need of long-term care often need assistance with personal hygiene and getting dressed, as well as basic household tasks like cooking and cleaning. Caregivers typically do not provide nursing or medical assistance. Most caregivers cannot administer medications but can make sure the patient takes them. While they cannot treat or diagnose a medical condition, they should be able to recognize signs of medical emergencies or any changes in the patient’s condition.
What Does Long-Term Care Insurance Pay For?
LTC pays for assistance in skilled nursing facilities, assisted living facilities, and also at-home care. LTC will also pay for hospice care.
If the individual is being cared for by family members or someone else, LTC can pay for adult day care or respite care to give caregivers a break. Respite care benefits may be available before the patient has filed a claim for other LTC.
Why LTC Is So Important
Long-term care insurance fills in where Medicare, Medicaid, and medical insurance does not provide coverage for care for individuals who are chronically or terminally ill, injured, or unable to perform ADLs due to age.
Medicare typically does not cover long-term care and, if it does, only for 100 days. Typically, Medicare will only cover skilled nursing care, not coverage to perform activities of daily living.
Medicaid will only cover LTC or nursing care once all other assets have been depleted. This means anyone using Medicare for LTC will have no inheritance to leave their children and no other funds to splurge and enjoy their last days as best they can.
Most medical coverage only pays for acute care. Like Medicare, there are sub-limits or caps to the amount of extended care traditional medical insurance will pay for.
According to LongTermCare.gov, costs in 2016 (the most recent year the government has data available) for nursing home care in a semi-private room were an average of $6,844 per month. A private room would cost an average of $7,698 per month. You could afford a Manhattan apartment for those prices if you didn’t need skilled nursing care.
A one-bedroom unit in an assisted living facility ran an average of $3,628 per month.
If you opt for at-home care, APlaceForMom.com cites the median cost of in-home, full-time care at roughly $4,480 per month for 44 hours per week of care. The rate for in-home care services rose as much as 3.8% per year between 2004 and 2020. That was before inflation, the great resignation, and rising minimum wage pushed rates for hourly workers like Home Health Aides higher.
If your plan is to have children care for you if anything happens and you are unable to care for yourself, ask yourself this:
- Are my children financially stable enough to care for me?
- Would they have the time if they are working a full-time job?
- Do they live close enough to provide full-time care?
- Would it take away from devoting their time and attention to their children, my grandchildren?
- If one child takes on most of the burden, will this create resentment for their siblings and cause family squabbles?
These are all factors to consider, although you can’t put a price on them. Having LTC insurance can alleviate the financial and emotional burden and give your family options without having to worry as much about costs.
Whether you’re considering LTC for yourself or sharing the details with your clients in order to create an additional revenue stream with LTC commissions, the time to buy is now.
