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Should You Buy Long Term Care Insurance?

Sep 13, 2016

In a previous post, I wrote about the two government-funded programs to assist with the high cost of long term care for the elderly: The Medicaid Waiver and the V.A. Aid and Attendance programs.  Both programs pay out only after applicants are approved based upon need, income and assets, and/or previous military service.  Non-qualifying seniors who require assisted living or skilled nursing must rely on personal assets or family assistance for their long term needs, an arrangement which can be financially devastating for all involved.  The benefit of long term care (LTC) insurance is thus to fill this gap between those that need and qualify for government assistance and those that face a rapid depletion of personal assets.

Within the last year, several of our visitors have asked whether or not long term insurance was a good idea. The answer, however, is not straightforward.  Just as with private health insurance, LTC insurers have decreased benefits and raised rates, particularly for women who are more likely to live longer and require daily living assistance.  In the past, providers offered multiple levels of coverage, many which were uncapped.  Many of these options may no longer be available, however, as rates continue to climb and plans are being capped by providers. Industry experts seem to agree that most of the value with LTC insurance plans is derived from early decision making.  Initial premiums will be much lower at age 50 than at 65 with future increases often based upon the initial policy adoption date. So the decision whether or not to buy LTC insurance should be based on three factors: Age of the new policy holder, family/individual health history and monthly budget/affordability.  The first two factors will help to determine the third. It's also important to note that an individual with a family history of hereditary ailments may require earlier assistance with daily living and thus have a greater need for insurance than those with a family history of good health and longevity.

Fortunately, there are many good resources for learning more about LTC insurance options and determining whether or not it is right for you.  The following government links will be helpful in determining eligibility of age-related expenses, the role of Medicare and LTC education.

Ohio Department of Insurance

Federal Information on LTC

Federal Information on Medicare