Most Will Need it ..
Few Prepare for it : Long Term Care Planning
Everyone understands the risk of driving a vehicle or the possibility of a disaster destroying their home , you prepare for it by purchasing insurance . However , the need for long term care is much more likely to befall someone than an auto accident or loss of a home . Few people prepare for this possibility until it is too late .
What is long term care ?
Long term care is not the same as medical care as it includes assistance with daily living activities such as : bathing , dressing , eating , help with moving around the house , and even household chores including grocery shopping . The cost of assistance with these daily living activities is something that is not normally provided under regular medical coverage . Types of long term care can range from care provided in one ’ s home , adult day care , or care in an assisted living or nursing home facility . True to its name , long term care concerns those individuals who due to illness or injury , cannot take care of themselves for an extended period of time , which is defined by not being able to perform at least 2 daily living activities without help . The cost of this constant and involved care comes with a hefty pricetag averaging from $ 40,000 to over $ 100,000 a year . This kind of unexpected cost can wipe out an individual ’ s life savings in a short period of time . This is why planning for such an event as early as possible is so important .
Doesn ’ t Medicare cover long term care ?
Unfortunately no , Medicare will not cover any of the assistance with daily activities that comprise long term care , as it is not a medical expense . It may help cover costs for a skilled nursing facility after a recent hospital stay , but only for brief period of time before the costs become your responsibility . Medicaid , on the other hand , will cover both the medical and non-medical care of a long term disability if that person has less than $ 2000 in assets , a near non existent income , and meets other eligibility guidelines to qualify . New Look back regulations prevent moving assets to attempt to qualify . Medicaid is only an option for the truly impoverished .
Methods of planning for a long term care event
INDUSTRY INSIGHT
LONG TERM CARE
If an individual is at the poverty level , Medicaid may be an option , and the very wealthy can easily pay out of pocket , but for the many individuals who lie in between those extremes planning is a bit more involved , however there are a couple ways to do so .
The most traditional route is to buy long term care insurance but it has its advantages and disadvantages . The greatest advantage is that when an individual is deemed in need of long term care the full benefit is available right away . The downsides , however , are that an individual has to be healthy enough to qualify for the coverage , and the premiums can be very high and have been known to increase dramatically . It is also important to be aware that benefit periods can be limited and if the policy is not used , any money that you put into that policy is gone . You either use it or you lose it , and there is no death benefit either . It is important when shopping for a long term care insurance to watch every detail as every policy is different . These pros and cons listed above are very common .
A second option is to use a single premium fixed index annuity with a long term care doubler benefit . What that means is you put a lump sum in at a particular age let it grow for a period of time and then start taking a monthly income from it . For example put $ 250,000 in at age 50 and have it start paying out at a monthly benefit of $ 1500 in personal Income at
SPONSORED CONTENT
age 65 . With the long term care doubler benefit if the annuitant ends up in long term care that monthly amount becomes $ 3000 . However in the unlikely event that person comes out of long term care that doubler would then be gone . If the individual ended up in long term care again in the future it would not double the benefit a second time . When going the annuity route its important to find an annuity that is designed to respond to long term care needs .
The third option would be to use a cash value life insurance policy that has a long term care rider . The advantages to this policy is that , unlike the long term care policy this option gives you both a life insurance death benefit and the option to be able to use that death benefit towards long term care if the need arises . For example , if the policy has a face value of $ 250,000 and the policy holder would need to go into long term care with annual costs of $ 50,000 that policy would provide 5 years of coverage before it was used up . If they never need long term care and pass away the $ 250,000 goes to their beneficiary . Life policies of this type can also be funded in a single lump sum payment like the annuity discussed above which saves on the lifetime cost of the insurance , but a life insurance policy will not provide a monthly benefit like an annuity would . It only has a death benefit or long term care benefit . Once again every policy is different and it is important that you read the fine print of the policy to see what is defined as a long term care event in the policy to trigger the benefit , not all policies are created equal .
Before you buy any long term care product of any kind it is extremely important that you shop around and study each product in detail to know exactly what is covered and how . an independent Agent broker or Financial planner to help guide you through the details of what is available , because , above all , you need to find the product that best suits your individual needs and situation .
This INdustry INsight was provided by Jason Flinn at The Bill Flinn Agency .
Bill Flinn Agency Inc
2754 S Park Rd Bethel Park , PA 15102-3858 www . billflinnagency . com
412-833-5351
For over 40 years The Bill Flinn Agency has been serving the Bethel Park and South Hills communities . Since opening our doors in 1972 our mission has been to treat our customers by the golden rule . Learn more about us at www . billflinnagency . com , or stop by our office on South Park Road in the heart of Bethel .
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