Your financial plan is not complete unless you have some protection from Long term Care, even as costs of plans rise and insurers drop out of the market. Long term care Insurance covers the cost of health care either at home or in a facility. It is tough to even think about, right? Below are a few things you should understand about Long term care:
1) Long term Care is not for every individual or family. The numbers have to be right and you must have a defined goal of protecting your assets for generations to come. It sort of like planting a tree later in life and eventually it grows into a 100 foot tree but long after you have passed. But if you do fit the parameters, please take a good hard look at all the options before you purchase a plan. Find an insurance advisor who has experience and works with many carriers. If you do so, there will be a great plan out there that fits your exact needs.
2) For current policy holders: take a look at your fees. Some insurance providers have raised their fees and some have left the market entirely because they did not estimate correctly how many people would use long term care. No need to panic if your insurer leaves the market. The new company will be required to honor the contract it purchases. Also, there are things you can do potentially to reduce the impact of the fees. One is to cut back the benefit period or another is to lower the inflation protection.
3) When designing a plan, you do not need to hit it out of the park and cover every possible future expense. If you can do it and it works than that’s great. But it is not always the case. There are ways to trim the costs from your policy and still get exactly what you are looking for. It is perfectly fine to buy a policy like this. For example, there are shared benefit plans for a husband and wife, shorter benefit periods like 3 or 5 years vs. lifetime plans, and inflation protection can be lowered all to help offset the cost. The idea is to design the plan that fits your exact niche and you do so by asking your advisor a ton of questions. He or she should be asking you the same as well to get to know you!
4) Please understand the government programs and how they work. There is an important misconception about how these programs will work for your care in the future. Medicare does not cover long term care. Medicaid is being cut everywhere, as states are finding it extremely hard to pay for. It is set up to care for the poor, however, and the hope is you will not qualify for the government help in the future.
Once you understand all the options, you will hopefully make an educated decision about what is best for your situation. It is my opinion you will get a better night’s sleep knowing that a portion of your future health care costs will be covered.
Listen below to hear Win Damon and I review this very topic on FM 106.1 and wnbp.com. Win and I have educational financial chats every Tuesday morning at 8:30!
Stuart Steinberg, CPA, MBA has been dealing with families and their money issues since 1988. He can be reached at 55 Pleasant Street Newburyport and at (978)864-9581 and stu@eaglerockfinancial.net
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Please keep in mind Insurance companies alone determine insurability, and some people, for their own health or lifestyle reasons, are deemed uninsurable.
Securities Offered through LPL Financial, Member FINRA/SIPC