While long-term care may not be top of mind until and unless you’re required to either give it or receive it, seven out of 10 people over the age of 65 will need some form of LTC in their lifetime. This could consist of home health care, adult day care, assisted living or skilled nursing.
Making matters worse, neither traditional health insurance nor Medicare cover the costs of this care — costs that can easily reach $10,000 per month. These expenses can not only wipe out your hard-earned retirement savings, but also create a financial burden for your loved ones.
The good news? LTC insurance will reimburse you for some or all of the care that you or your loved one requires.
But as with all insurance, there is no one-size-fits-all LTC plan. Premiums are based on many factors, including age, health, amount of benefit and options selected, such as inflation protection. Finding the policy that’s right for you requires thoughtfully assessing your personal situation and weighing the pros and cons of your options.
Federal LTC (FLTCIP)
Federal employees, military and their immediate family members have access to the FLTCIP.
Because the FLTCIP has one pricing schedule based solely on age, it presents a very good value to most women, who tend to have higher LTC costs and therefore typically face higher premiums offered by independent insurance carriers.
On the flip side, FLTCIP is not subsidized by your agency; does not offer a refund if the insurance is unused; and does not offer a discount if you are in very good health or, alternatively, may decline you altogether if you are in poor health.
For these reasons men (and some women) can likely find coverage comparable to that of the FLTCIP, but at a lower cost, from an independent insurance carrier.
Shared-care LTC
For many couples, shared-care policies may be worth considering as an alternative to FLTCIP.
These types of policies, which require couples to apply for coverage at the same time from the same carrier, allow couples to share benefits back and forth to whomever has the greatest need at a given time. As such, if one of you passes away without having used any or all of your shared long-term care benefit, that extra insurance will pass directly to your spouse, extending the length of his or her LTC benefit.
LTC alternatives
For some, LTC alternatives may be the best choice.
These alternatives, usually a combination of life insurance and/or annuities with long-term care riders, do not always offer the most “bang for your buck” in terms of an LTC benefit. However, they can work very well for people who already have health issues or are relatively old when looking for benefits. They also solve the “use it or lose it” concern, as your beneficiary will inherit its proceeds if it goes unused.
In conclusion, there are many LTC options out there. And while the majority of people purchase LTC insurance between the ages of 45 and 65, it’s not advisable to put off this decision until an unexpected health issue warrants it. In fact, waiting too long is likely to backfire by limiting your options and jacking up premiums.
It’s critical to set aside some time now to discuss LTC, an admittedly tough topic, with your spouse, your family members and a financial advisor. To ask the tough questions, consider your current or future needs, and find the plan that will protect you and your loved one’s future.
Kateri Turner joined the Government Employees’ Benefit Association — a nonprofit promoting access to insurance and investment options — in 2016. As a Certified Financial Planner, she is well-versed in all aspects of personal finance, and is licensed for the sale of investments, insurance and long-term care. She believes that it is important to take a holistic approach to wealth management that includes savings, investments, insurance, retirement income, estate planning and tax diversification. Turner enjoys assisting members who are retiring, but finds great joy in developing long-term financial planning relationships.
