NBC Today Show: How to Pay for Long Term Care
Several years ago, Jean Chatzky, the financial editor for NBC's "Today Show," appeared with Matt Lauer when he was still hosting the program to discuss the need for consumers to plan for long-term care costs before they retire.
The problem of long-term health care is both a cash flow issue and a family issue. It has been a big media topic due to an aging America. Since COVID-19, the subject has become even more critical. Because of longevity, more and more people require extended health care due to an illness, accident, or the impact of aging.
Cost of Long-Term Health Care is Expensive
Matt Lauer pointed out that medical costs, especially unexpected ones, can add up. He says most people want to have a healthy retirement, but there's a big wild card regarding aging and long-term care health care costs.
Since the virus crisis, the cost of long-term care services has increased rapidly due to increased demand and higher labor costs. Consumers need to prepare families and finances for the consequences of declining health and aging.
"A 65-year-old couple will need an estimated $260,000 to pay for unreimbursed medical expenses through retirement — and that doesn't include Long-Term Care, according to Fidelity Investments. If you want to have a healthy retirement, there's a big wild card you need to be prepared for health care expenses."
Matt Lauer
You can find the current and future cost of long-term care services where you live by using the LTC NEWS Cost of Care Calculator by clicking here. You will also find many essential state-specific information regarding long-term care where you live.
Lauer pointed out health insurance (including Medicare and supplements) does not pay for long-term care costs, something he reported that 7 in 10 people would need at some point in their lifetime.
“Long-Term Care will cost anywhere from $44,000 to $96,000 a year depending on the type of care you require but you need a plan to pay for that.”
Jean Chatzky, Financial Editor for NBC’s “Today Show”
In the few years since the show aired, the costs of long-term health care services have increased. According to the LTC NEWS Cost of Care Calculator, the average cost of a nursing home nationally is over $100,000 a year; in some places, it is approaching $200,000 a year.
Luckily, most long-term health care is delivered at home, adult day care centers, and assisted living. All these options are still expensive, and the costs are increasing as well.
As labor costs continue to increase and supply increases due to greater need and demographics, long-term care's financial impact is dramatic.
LTC Insurance Can Be the Solution
Traditional Long-Term Care Insurance will pay for all levels of care, at home or in a facility. Today, most people purchase Long-Term Care Insurance in their 50s. If you are in reasonably good health, you can find affordable plans. Keep in mind that Long-Term Care Insurance is customizable - you can decide the amount of benefits - and the cost of your policy.
Premiums on these policies may be tax-deductible. The American Association for Long-Term Care Insurance says most states offer partnership policies that provide additional dollar-for-dollar asset protection.
Chatzky says that if you've been saving for years and are looking to leave something to your kids, Long-Term Care Insurance is a way to ensure that all of your money doesn't go to pay for health care.
Hybrid policies also exist and are growing in popularity. These hybrids combine a life insurance policy or annuity with a long-term care benefit. Actual hybrid policies meet federal guidelines under Section 7702(b) of federal code.
If you never require long-term care, your family can still collect on the death benefit or the annuity's cash value. While the Today Show reported that these plans do not have inflation options, the better insurance companies offer inflation options on these hybrid policies.
Experts suggest speaking with a Long-Term Care Insurance specialist who works with the top companies to explain options.
Lauer asked Chatzky when is the best time to start shopping for long-term care solutions.
“You want to start shopping at about age 50 and you want to ramp up your shopping very quickly.”
Jean Chatzky
She explained premiums after age 60 are higher but health conditions start to set in which could make premiums high or make a person uninsurable.
“You want an “A” rated insurer and shop around (the top companies).”
Jean Chatzky
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She also recommends working with a Long-Tern Care Insurance specialist and not wait too long to obtain coverage.
Long-Term Care specialists indicate that premiums are based not only on the benefits you purchase but also on the application age you get the policy and your health.
“We will end the year with some seven million Americans who have traditional Long-Term Care Insurance protection and another million who have a linked-benefit (hybrid) product that provides some LTC protection."
Jesse Slome, executive director of the AALTCI.
There are several online resources to learn more about long-term care planning:
LTC News: includes news stories on health and Long-Term Care Planning. It also has videos and website links as well: www.ltcnews.com.
US Department of Health and Human Services LTC site: www.longtermcare.acl.gov
The National Institute on Aging: www.nihseniorhealth.gov
The American Association for Long-Term Care Insurance: www.aaltci.org