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Long-Term Care Insurance As A Smart Strategy To Protect Your Assets

Many people don’t understand what long-term care insurance is or what it does. At the most basic level it’s insurance to help reduce or eliminate the cost of extra help you may receive through home healthcare, assisted living or a nursing home. The number of people who need this type of insurance is more than you may think . . . and it’s growing.

Do you realize that if you’re 65 years of age or older right now, that you have a 70% chance of needing long-term care services in the near future? The department of health and human services reported that about 9 million Americans, age 65 or older needed long-term care services in 2010. And by 2020 that number will increase to 12 million Americans.

Long-term care services are typically provided to people with cognitive issues such as Alzheimer’s or dementia or to people who have difficulty completing two or more of what’s called “activities of daily living”. There are six basic activities of daily living also called ADLs, they are:

  • Eating
  • Bathing
  • Dressing
  • Toileting
  • Transferring
  • Continence

When people need help with activities of daily living, they usually require extra support, and this support can come in many forms. The first is support from family members for basic things like getting around, preparing meals or even bathing. A family member will often take on the role of caregiver for a loved one to help out. That’s one type of long term care.

Another more advanced form of care is to have a home healthcare aide come to your home to do things like change bandages, administer medicine or sometimes they even handle dressing and bathing needs. Another alternative is to move into an assisted living facility for this care which can be a middle ground between staying at home and living in a nursing home.

And then the third type of long-term care service is assistance in a nursing home. It’s this form of long-term care service that most people associate with when thinking of long term care, probably because it’s the most costly.

A MetLife survey on the cost of long-term care found that it will cost more than $42,000 a year at an assisted living facility, $87,000 for a year in a nursing home, and an overwhelming $184,000 a year to pay for home health aides working around the clock – that’s if your plan is to stay at home! Oh, and by the way, 8 out of 10 people who reach the age of 85 will eventually need this kind of help.

So, the question is, with all that goes along with long-term care services, how on earth do you pay for it? I mean we spend our lives socking away money in savings and investments so that when we retire we can maintain a standard of living. You certainly didn’t spend all that time saving to pay for your long-term care expenses, right? That’s not exactly what most people have in mind! So how do you protect your assets from whittling away due to the high cost of long-term care expenses?

The answer is Long-Term care insurance. This insurance gives you the peace of mind knowing that your out-of-pocket costs will be greatly reduced – or 100% taken care of – it just depends on what kind of policy you choose.

Like most things that involve planning ahead, the earlier in life you buy a long-term care policy, the better off you’ll be. While it might be too late for an 80 year old who didn’t buy a policy when they were younger, chances are it’s not too late for you. But keep in mind, although long-term care insurance is one of the more expensive insurance products out there, the alternative can be devastating. By not enrolling in a long-term care plan, you risk paying out-of-pocket until your assets are depleted, leaving Medicaid to fund your long-term care expenses.

There are many ways to structure a policy so that it offers a comfortable level of support while keeping the premiums down. Some people can afford a policy that covers most everything, and then others can only afford a plan that pays a portion of long-term care expenses. But both ways are good strategies to protect your assets.

To learn more about long term care insurance and how it can work for you, please give us a call at (717) 872-7756 and ask for Liz Martin, she’ll help you understand better what your options are.