Long-term Care Insurance: The Missing Piece of Your Estate Plan

If you wanted to cross a bridge and someone told you that the bridge had a 70% chance of collapsing, would you cross it? No. You are a reasonable person and you would create an alternative plan to reach your destination. Unfortunately, you face the same odds for a similarly catastrophic event and most have not prepared for it.

If you are over the age of 65, you have a 70% chance of needing some sort of long-term care—whether it’s in home, assisted living, or skilled nursing level care. If you do end up needing long-term care (LTC), which you likely will, you’ll need to figure out how you’re going to pay for it. You may receive Medicare and a Medicare supplement but that will not cover the cost of LTC. Medicare will only cover up to 80 days of care but only if you are improving. If your progress hits a plateau, you will need to find an alternative means of paying.

LTC can be extremely expensive. Depending on the level of care, you can expect to pay anywhere from $5,000 to $10,000 a month or more. Most do not have the cash on hand to pay out that kind of money for the long-term. If you do end up paying out of pocket, you will likely need to liquidate your assets (home, care, retirement accounts, and investments) to cover the bill. Paying out of pocket, for most, means that they will not be leaving anything for their loved ones when they die. Everything they own goes to cover the cost of care.

Luckily, there are alternatives out there. Medicaid is one alternative which I have written about at length in other articles. Medicaid may be a viable and beneficial option for you. Check out my other articles to learn more.

Another alternative is long-term care insurance. LTC insurance is much like life insurance, car insurance, or any other type of insurance in that you pay monthly premiums, and, upon the occurrence of a triggering event, the policy pays out. For car insurance, the triggering even is a wreck. For life insurance, its death of the insured. For LTC insurance, it’s the need for long-term care.

LTC insurance premiums do present a monthly obligation. They can cost anywhere between $1700 to $2300 per year. However, that amount pales in comparison to the cost of LTC out of pocket. With LTC insurance, you will pay, in a year, less than half of what you’d pay in a month without the policy.

Another benefit is the variety of policies available. This allows you to pick the plan that will ensure a return on your investment. For example, some LTC insurance policies have a chronic care rider. This means that the policy will pay out if you have the need for care beyond what Medicare will pay for but not to the level where you need assisted living or nursing home care. Thus, even if you are a part of the lucky minority who never needs LTC, LTC insurance can still benefit you.

If you have questions about long-term care insurance or your estate plan, the attorneys at McIntyre Elder Law are ready to help. Contact us at 704-259-7040.

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