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What is Long-term Care? 

As the name suggests, long-term care is care that lasts over an extended period of time. Whereas short-term care may be necessary following a surgery or an accident, long-term care is often set up because a person has a chronic or degenerative condition.

More often than not, long-term care of this sort involves more than simply medical care. It likely will also include day-to-day tasks and necessities one can no longer perform on their own–household chores, hygiene-related tasks like bathing, keeping well-fed, etc., may all fall under this umbrella.

The Average Cost of Long-term Care

Throughout most of the country, $80,000 – $90,000 per year is a typical cost for nursing homes–assisted living facilities being not dramatically less expensive. Even though the sticker shock may not be as great for in-home care, this option is certainly not inexpensive. In much of the country, home health workers can cost $20-$25 per hour. Additionally, this price tag can rapidly increase if you or a loved one requires 24/7 care or intensive or specialized services.

This means that many families attempt to cobble together caregivers within the family. As you might imagine, this can be stressful and overwhelming for both the one needing care and especially for the caregivers who are likely trying to balance a wide range of other obligations. If you are considering this option, it is crucial to have transparent conversations with all family members and make sure that everyone agrees.

In consideration of the mind-boggling price tags, it’s worth considering the potential options for financing this care–whether for a relative or for yourself as you consider your future and how best to prevent a heavy material, time, and emotional burden from being placed upon your family members. We’ll briefly cover one of these popular options below–long-term care (LTC) insurance.

What is Long-term Care Insurance? 

Long-term care insurance is a specific type of life insurance designed to cover its policyholders’ long-term care needs. Usually, the needs covered by this type of policy would include things not covered by traditional health insurance. Depending on the features of the specific policy, its benefits can be used to pay home health workers’ salaries or be used for the bills at nursing homes. Considering each insurance provider’s policy will be set up differently with its own unique set of features, it is important to carefully assess your preferences with the aging process when you or your financial professional sets up your policy. It is also critical to regularly review your policy to ensure that it is still working for you and your evolving needs.

What You Should Know About Long-term Care Insurance

Long-term care insurance is an integral part of many families’ financial planning process. But, long-term care insurance is not without its limits. There are several things to be aware of. First, some policies only cover long-term care for a finite amount of time, such as two to five years. In these cases, a person may out-survive their policy. This means that they may be left scrambling to pay for their coverage.

A second caveat is that most policies put a maximum on their daily reimbursement levels. Some facilities or options may be more expensive than the maximum covered by the policy. In this case, families can be faced with out-of-pocket costs.

A final concern may be in terms of premiums. Generally, long-term care insurance costs are lower when you buy it when you are younger or in relatively better health, as with most health and life insurance policies. The insurance company may raise insurance premiums over time, which could potentially price some people out of the insurance market. A prudent financial professional will ensure to go over the specifics of how such a policy works and how it would affect your expenses over time.


Consult a Financial Professional

There are many different options available when it comes to how to go about actually getting LTC insurance (such as it being a feature of some annuities, an option to add onto some life insurance policies, or it being a strictly long-term care policy). Depending on where your assets are allocated, out-of-pocket may not be the only way you would have to pay for such a policy either. These are only two of several factors that should be considered when figuring out where long-term care insurance is right for you.

For these reasons, it’s important that before deciding on whether or not to make long-term care insurance a part of your retirement plan, you ensure to consult with a financial professional who not only has a comprehensive knowledge of how LTC insurance works and the various options available, but especially one who has holistically considered your financial situation and how LTC insurance would fit into it.

For assistance in deciding if LTC insurance is right for you or if you have any other retirement planning questions, give The Ivy League Advisory Group a call at 866-360-2724 or schedule a 15-minute phone call at a time convenient for you.


This article was contributed by Jessica Thomas with sixtyandme.com