>Unequivocally, yes, you do. According to the U.S. Department of Health and Human Services, approximately 70% of Americans who are currently age 65 or older will need some type of long term care in the future. And the costs associated with long term care continue to rise. A 2013 Genworth Cost of Care Survey indicated that the average nursing home stay costs $83,950 and, in some states, can be as high as $255,891. Home health care isn’t necessarily cheaper, either. The same survey found that the average annual cost for round the clock care by a professional home health aide can be as high as $170,000, often costlier that a high quality assisted care facility or nursing home.
Don’t count on Medicare. It may cover short term stays in a skilled nursing facility after leaving the hospital, however it will not cover long term custodial care at home, in a nursing home, or at an assisted living facility.
The selection of investments and the funding of these expenses can be a daunting task. While traditional long term care insurance has historically been the most common investment individuals have made for future care, it has most recently come under fire because of unexpected increases in premiums and fewer carriers that sell the coverage. That said, traditional long term insurance care can provide assistance with expenses and, if protection of health care costs is the primary goal, this can be a viable alternative.
One of the primary criticisms of traditional long term care insurance is the “use it or lose it” provisions of the plans. If the care is not used, there is no value to the premium payments made to the policy. In addition, premiums can be a component of ongoing cash flow, which may not suit an overall retirement planning strategy.
If you’re interested in planning for your future care, and at the same time preserving assets for heirs, hybrid life insurance with a long term care rider may be a worthwhile alternative. Hybrid life insurance has increased in popularity over the last five years, yet is still relatively unknown and a more complicated vehicle for funding future care. This insurance is an attractive means of financing long term care expenses, if they become necessary, but also allows the flexibility of including a death benefit if the funds aren’t used for long term care expenses. Premiums may be paid over time, or in a single premium payment at the time the policy is purchased contingent upon policy provisions. Hybrid insurance may have a number of additional stipulations which should be reviewed carefully before any investment is made.
Insurance is not a requirement for addressing long term care needs. Individuals can always self fund care in the future, if they have the savings to do so.
Don’t wait to explore options for future care. It only gets more expensive, and you may ultimately find that you can’t buy long term care insurance.
For additional information, contact EAB HealthWorks.