by Joan DiGiovanni.
When did it happen that I became middle aged? I am startled to think of this, so much so that I took a moment to look up the definition of ‘middle age’ (perhaps I should have just looked in the mirror). According to the Oxford English Dictionary, it is the “period between youth and old age, about 45-60 years old.” Unfortunately, that confirms it.
Issues that were once only my parents’ concern are now my very own. Long Term Care (LTC) insurance is one such topic that I knew nothing about but wondered if it is something I need now or ever will. I was referred to Tobe Gerard a long term care insurance specialist in the Boston area; Tobe sells insurance but only long term care and has been in the business for 30 years. She was kind enough to spend some time with me recently to help me understand it.
According to Tobe, one way to look at LTC insurance is that it is a way to protect your retirement savings from being depleted and gives you peace of mind should you find yourself with a long term illness. This insurance transfers the risk from you to the insurance company in exchange for a premium. The average age today of someone buying LTC insurance is somewhere between 55-64. Keep in mind, the premiums are less expensive the younger you are and if there is a change in health and you do not have coverage, the insurance may not be available.
Generally LTC insurance covers care that your private health insurance company, Medicare or Medicaid do not. LTC is typically needed when an individual is unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating and walking. With many chronic illnesses, long term care is necessary and no one wants to either burden a family member or deplete their life’s saving. LTC insurance coverage includes costs associated with assisted living, adult daycare, home care, nursing homes and hospice.
When considering LTC insurance, first consider your assets. If you have over $70,000 in assets and you are over 50 years old, it might be time to look into this insurance. If your assets are limited, then Medicaid and community-based programs may be more appropriate.
Once you decide LTC insurance makes sense for you, Tobe recommends a 4-pronged approach to determine your coverage:
1. Determine what the per-day cost for care would be adequate in the area you plan to live. Checking with nursing homes and assisted living facilities in that area would provide a good baseline for cost.
2. Factor inflation into the calculation; this is determined by your age when purchasing the policy.
3. Consider the elimination period—it is the period of time where you are paying out-of-pocket expenses before the policy takes effect.
4. Determine the period of time that the policy will pay benefits to you; you can choose any time between 2 years and Lifetime. Sometimes this is decided based on your budget and what is affordable, while other times it is based on your genetic predisposition to certain chronic illnesses such as Parkinson’s or Alzheimer’s.
Ironically, we do not give a second thought to purchasing insurance for our homes and cars but when it comes to protecting our quality of life most often in our final years, the issue is often overlooked. Working with a knowledgeable long term care insurance specialist like Tobe will make these decisions a lot easier. And although I am still on the younger side of that ‘middle age’ spectrum, now is the time to weigh my alternatives.
Have you or your parents purchased long term care insurance? If so, consider sharing your experience.
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