Think You Have Long-Term Care at Work? Probably Not.
As the years go by, you might notice a shift in the nature of your workplace conversations. Discussions revolve around the newest ache and pain you have, the physical toll of aging, the health challenges your parents are facing, and the intricate maze of retirement
planning.
Discussions about retirement often turn to the daunting topic of managing the substantial costs and consequences associated with long-term care services. While it's not the most enjoyable subject to contemplate, for those in the Generation X or Late Boomer categories, it's likely a relevant and personal issue as they navigate the aging challenges their parents face.
It's a rare occurrence for someone between 45 and 65 years of age to lack a personal connection to the realities of long-term care, whether through family, neighbors, friends, or colleagues.
If you're like the majority, the idea of requiring assistance for daily tasks or living in assisted living, memory care, or a nursing facility might not be the most attractive thought. However, with the rise in life expectancy, a growing segment of the American population is realizing the need for help with day-to-day activities. Furthermore, as we age, there's an increased likelihood of experiencing cognitive decline, making the need for targeted, supervisory care all the more essential.
Avoid Misperceptions
Protecting your financial assets (401k, IRA, and other savings) from the extensive costs associated with long-term care is often best achieved through Long-Term Care Insurance.
Many individuals mistakenly believe their workplace benefits cover this need, but this is rarely true. Regrettably, numerous misconceptions deter individuals from safeguarding their retirement savings, leaving them vulnerable to the financial strain and stress accompanying a long-term care event.
- "I have long-term care insurance at work." – The chances of you having Long-Term Care Insurance through your employer are slim, as it is a benefit seldom provided by companies. Even in cases where it is offered, employers typically do not contribute to the premium, potentially making it costlier than individual plans available on the open market. A common point of confusion exacerbating this issue is the mix-up between Long-Term Care Insurance and Long-Term Disability Insurance, which are distinct types of coverage serving different needs.
Long-Term Disability insurance is designed to substitute a portion of your income if a disability prevents you from working. However, it does not contribute any funds toward your care needs. Typically, employers offer short-term disability benefits, ensuring up to three to six months of income if you find yourself unable to work. Following the exhaustion of short-term benefits, a Long-Term Disability policy may come into effect, potentially covering up to 60% of your income until your return to work or you reach the age of 65.
Though many employers extend this as a benefit, the employee often bears the cost. Importantly, this policy type is non-portable and does not address the need for long-term care services, underlining its limitations as a comprehensive solution.
Long-Term Care Insurance pays nothing toward income. It pays for the costs of extended care. This would include home health aides, nurses, physical and speech therapy, adult day care, assisted living, memory care, and nursing home care. These policies you own and have nothing to do with your age or whether you are employed or retired. In-home care services are not cheap, and neither is assisted living. Those costs are well over $100,000 a year if you need a nursing home.
The cost of care services increases rapidly every year. - LTC NEWS Cost of Care Calculator - How Much Does Care Cost Where You Live?
- "Health insurance pays for this." - No, neither health insurance nor Medicare and its supplementary plans cover long-term care, as they only cover skilled services for a limited amount of time. The reality is that the majority of long-term care falls under the category of custodial care, which includes assistance with daily activities and dementia care, and this is not covered by standard health insurance policies or Medicare. Consequently, you would need to bear the financial burden out-of-pocket, rely on family members to provide care, or perhaps a combination of both.
- "My spouse or kids will take care of me." – Providing long-term care services is an immense challenge, even for a spouse or partner who deeply cares for you. The difficulty only increases with age. Many individuals in need of long-term care require assistance with personal tasks such as bathing, toileting, dressing, and other daily activities. Imagine the physical and emotional toll of providing these intimate services, especially if you or your spouse are in your 80s. It's not only physically demanding but can also be awkward and embarrassing for both parties. Professional caregivers are trained to handle these sensitive situations with dignity, allowing family members to maintain their roles and cherished relationships. When it comes to your children, remember that they are aging and may have their own careers and family obligations to manage. Consider how old they will be when you are in your 70s or 80s. Relying on them to provide caregiving services may not be practical or fair. Family caregiving is not always the ideal solution.
- "It is hard to make a claim, and they don't pay the claims anyhow." - The opposite is true. A study conducted by the U.S. Department of Health and Human Services revealed a remarkable 97.6% payout rate for Long-Term Care Insurance claims, underscoring the reliability of these companies in fulfilling their commitments. Every day, substantial sums are disbursed to families across America, providing crucial financial support that preserves their assets and alleviates the emotional and physical strain on their loved ones.
- "Long-Term Care Insurance is expensive" – The truth is Long-Term Care Insurance policies are very affordable. Many articles you might read misrepresent the facts. Premiums are based on your age when you obtain coverage, your health, and the amount of benefits you apply for. You design the policy so the premium can range from very low to high. If you get a plan in your 40s or 50s, many people can design a plan for under $100 a month. If you are in your 70s, getting affordable coverage will be more difficult because of the advanced age and your health. However, a long-term care specialist can help you find an affordable plan whether you are 40 or 70.
Long-Term Care Insurance is Affordable
So, what does Long-Term Care Insurance cost? Brent Donarski, a 30-year veteran specialist in long-term care planning, runs www.myLTCspecialist.com. He notes that the majority of individuals he consults with across the country are often pleasantly surprised at how reasonably priced Long-Term Care Insurance can be.
He gives an example of a Missouri couple, ages 55 and 50, in excellent health. They could obtain a plan that initially pays $4000 a month with an initial pool of $125,000 each, growing 3% compounded each year. This would include spousal shared benefits, which means if one of them were to exhaust their benefits, they could use the other spouse's benefit, but if a spouse passes, the premium disappears. The full unused benefit goes to the survivor. Premiums can be as low as $333 a month for the couple. This plan would qualify for the Missouri Partnership program, providing them with additional dollar-for-dollar asset protection.
Donarski says the bigger the benefit, the larger the premium; likewise, the smaller the benefit, the smaller the premium.
Donarski says the consumer gets to choose the amount of benefits within the policy.
The consumer can custom design their plan. We can develop outstanding coverage which fits most budgets.
Most states offer partnership plans with the additional asset protection offered by the program. It allows the policyholder to design just the right size plan without over-insuring.
Total asset plans with unlimited benefits are available for those with larger estates or family history, which includes bloodlines with Alzheimer's or dementia, which lasts very long periods of time. This would provide a person with unlimited long-term care benefits.
One company, One America, provides unlimited long-term care benefits with an asset-based hybrid policy that includes a second-to-die death benefit. With traditional LTC Insurance, National Guardian Life also provides an option for unlimited long-term care benefits. It also offers a return of premium riders at an additional cost.
Available Group Plans Offer Wider Underwriting Rules
Employer Long-Term Care Insurance plans are available, but few employers make this benefit available to employees. The most significant benefit is the broader underwriting requirements offered by such plans.
Few traditional group policies are available; LifeSecure is currently the most common. It is more expensive for most people (unless the employer is paying part of the premium), but if you have health issues, it might be a good option.
Certain insurance plans offer coverage for both in-home and facility-based care, intertwining life insurance with extended care benefits. It is crucial not to confuse these with hybrid policies that align with federal regulations for Long-Term Care Insurance. Common providers of these plans include Allstate, Chubb, and Trustmark, allowing policyholders to utilize a portion or the entirety of the death benefits prior to their passing.
However, it's important to note that these plans tend to be on the pricier side, and the allocated benefits for care are relatively modest, often because the death benefits are typically $100,000 or less. Additionally, these plans do not afford the same consumer protections and tax advantages that are accessible with policies adhering to federal guidelines for Long-Term Care Insurance.
Shopping at Work Usually Not the Best Place for Long-Term Care
Seeking long-term care coverage through your workplace might seem like a convenient option, but it’s usually not the most advantageous choice, particularly if you are in good health. Employer-provided plans often come with higher premiums and may not offer the comprehensive coverage that you can obtain elsewhere. Plus, these policies may not be portable, meaning if you change jobs, you might lose your coverage or pay a much higher premium.
Planning for long-term care is a crucial aspect of your retirement strategy, and the ideal time to start is in your 40s or 50s. At this stage of life, you are more likely to enjoy good health, which makes you eligible for lower premium rates and gives you access to a wider range of policy options. By securing your Long-Term Care Insurance at a younger age, you are taking a proactive step towards safeguarding your future, ensuring that you have the necessary support in place when you need it.
To navigate the myriad of options available and find the most affordable and suitable Long-Term Care Insurance policy, it is wise to consult with a Long-Term Care Insurance specialist. These experts have in-depth knowledge of the industry and can provide personalized advice based on your specific needs and circumstances. They represent a variety of top insurance companies, ensuring that you have access to the best policies on the market.
Seeking long-term care coverage through your employer might seem like a straightforward option, but it's typically not the most cost-effective or comprehensive solution, especially if you are in good health. Planning ahead and consulting with a Long-Term Care Insurance specialist can help you secure the right coverage at the best possible price, providing peace of mind and financial security for the future.