Long Term Care Insurance: sometimes forgotten...until it’s too late

Posted by Christy Putnam on February 7, 2018 at 10:54 AM

"Why do I need Long Term Care Insurance? I already have health insurance!"

This is a common response when people are asked if they have considered Long Term Care Insurance (LTCI). What people don't realize is that their health insurance will typically not cover long-term care needs in a nursing home, assisted-living facility, or in one's own home. Another common misperception is that it's just the elderly population that has these needs. Unfortunately, this is not true, as young people also experience accidents as well as chronic and debilitating illnesses, all of which can create a need for long-term care.

"When I should I buy LTCI?" is always the question, but the answer is complicated. Most people think that they will not need LTCI until they get older, so they delay the evaluation and purchase processes. What people don’t consider - often until it is too late - is that LTCI is medically underwritten. This means that individuals must be relatively healthy in order to obtain the coverage. Premiums are based on age, so the younger one is when qualifying for the coverage, the lower the premiums will be. Typically, it is best to purchase coverage prior to age 65.

Premiums are also based on other factors, such as the amount of coverage applied for, gender, and location; they can even vary by insurance carrier. It's important to compare policies, consider the financial situation, and evaluate insurance carriers being considering. This may be a policy you own for quite some time. You want to make sure it will meet your needs in the future and that the company providing the policy will be around to pay out the benefits.

If you are an employer looking to potentially increase your benefit offerings, LTCI may be something you want to consider. Employers have numerous options. They can pay the full premium for coverage for their employees, they can purchase a base-plan for employees and allow those employees to buy up to a more robust plan, or employers can offer a voluntary plan in which employees are responsible for the whole premium if they choose to participate. There are several advantages to employer-sponsored LTCI plans, some of which include premium discounts, tax incentives, and simplified health underwriting. The coverage can be offered to employees, spouses, partners, parents, and even parents-in-law.

However, for those who are reasonably healthy, non-smokers, and married (or living with a partner), purchasing an individual LTCI policy may provide a better policy at a lower premium than a potential employer plan. When considering an individual policy versus an employer policy, it is advisable to consider the current and future benefits, the insurance carrier issuing the policy, medical underwriting, and the premiums.

The long-term care statistics reported by American Association for Long-Term Care Insurance are staggering. Baby boomers turning 65 are expected to grow from 35 million in 2000 to 71.5 million by 2030. Older adults with disabilities will more than double between 2000 and 2040, increasing from 10 million to 21 million. Yet as mentioned above, not all people in need of long-term care are elderly. The statistics show that that 37% of people in need of long-term care are 64 years of age and younger.

Whether you are in the market to consider a new policy, reviewing an older policy already in place, or an employer looking to expand your benefits offerings, you want to make sure to do your homework and possibly seek the advice of an expert in this area.

Topics: Healthcare

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