Do I Need Long Term Care Insurance?

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Do I Need Long Term Care Insurance?

As a society we are rapidly aging, and as a result there is a growing need for proper long term care planning. Since 2011, the earliest baby boomers started an unprecedented wave of retirees that will continue for the next 15 years. According to the Pew Research Center, approximately 10,000 boomers will turn 65 every day until 2030. Boomers have affected society in a multitude of ways throughout their history and as they age their impact on the health care system in the United States will be unprecedented.

What is long term care?


Long Term Care Feeding

Long term care refers to non-skilled assistance with daily activities due to an injury, sickness or cognitive impairment (think dementia or Alzheimer’s disease). Long term care is described as care needed for longer than 90 days. Basic daily activities include bathing, toileting, dressing, eating, incontinence (recognizing the need to relieve oneself) and transferring (moving from one place to another). Long term care services can be provided at home, in facilities like an assisted living center or in the most severe cases in a skilled nursing facility.


Medicare provides very little for long term care.


A common misconception about Medicare and Medicare supplement plans is that they pay for long term care expenses. In truth, Medicare pays for only short term skilled care in nursing facilities after hospitalization and limited skilled care at home for short periods of time and with very specific qualifications. Long term care, which is classified as care needed for greater than 90 days, is generally not covered by Medicare. For more detailed information, you can reference the Medicare website HERE.

For individuals that have very little in the way of assets there is Medicaid or in California the Medi-Cal program, however the vast majority of individuals will never qualify for assistance through this safety net since you have to spend down your assets to receive aid.  For most, long term care will be up to each individual to fund their care either through spending existing assets, private insurance or a combination of the two.

Let’s look at a few private insurance options.

Long Term Care Solutions


One tool that should be considered as part of any financial plan is a properly structured long term care insurance policy. Long term care insurance is a policy that provides for a financial payment in the event of a long term care need. There are a variety of policy types with the most common policies paying a daily benefit triggered after a short waiting (elimination) period. Benefits can be used for care in the home or a qualified long term care facility.

A growing trend in the insurance industry has been the introduction of plans that combine life insurance with long term care benefit riders. A long held concern for many consumers has been the use it or lose it nature of long term care insurance. Traditional long term care plans do not pay a death benefit. Combo plans will always pay out whether in the form of lifetime benefits paid while you are alive, or in the form of a death benefit and is increasingly becoming a favorite tool of insurers as well as consumers..

Women are particularly vulnerable

Women and long term care

While members of both sexes consistently require long term care and can benefit from a long term care insurance policy, it is estimated that women more frequently access long term care benefits than men. According to the American Association for Long Term Care Insurance (AALTCI), women are far more likely to need long term health benefits and as of 2012 accounted for approximately 65% of all new claims opened. Insurance carriers have rolled out gender distinct prices in response to these statistics on traditional long term care policies. This is an issue that all women should consider as they plan for their retirement.

When and where to start?


It is best to consult a qualified long term care insurance professional that has knowledge of the issues surrounding long term care and an understanding of the different policy options. While most people put off planning for their long term care needs, it is best to begin your investigation process early (Late 40’s). Rates are lower and more affordable the younger that you start the planning process, and provide you with the opportunity to build up more benefit over time. Additionally, a significant illness or injury can make insurance unobtainable. It is recommended that you seek out insurance carriers that have a long track record with long term care (15+ years or more) and a history of rate stability.

There is a growing senior population that will be fighting for diminishing resources in the near future. Government resources are already tapped and will be scarcer in coming years as the senior population continues to grow. The need for quality long term health care will become more pressing in the coming years. Understanding the issue is the first step in the process. Having a plan will be crucial to maintain your dignity and choice.