The Cost of Long Term Care (and how to plan for it)

by Michael on April 1, 2019

in Uncategorized

I know, I know. Nobody wants to go into a LTC facility. But the truth is, many people do every single year. If a person faces a health issue, and cannot take care of themselves, this is where they recover at. And for many, it is a temporary situation. And for many, it is covered by insurance. Private insurance will often cover this cost, and Medicare has a limited benefit. It does not cover custodial care at all.

But what about the situation where a person is older and never recovers to the point that they can be on their own? What then?

If I had to name the one area that most of us fail to plan for, it is this area. And the thing is, even those who have planned VERY WELL in other areas of life, can be wiped out due to this situation developing.

At $312 per day (cost at the local Avelon Health Care facility – that is OVER $9,000 per month or $108,000 per year) a person can go through their savings very quickly.

Does MediCal cover this cost? Well, perhaps. But if a person involves MediCal, they will have to spend their savings and then MediCal may enter the picture. But they will recover what they spend after a person passes away from their house. How can a person avoid that situation?

In the Insurance World, there are three basic coverages that a person can plan for this with.

  1. Long Term Care Insurance. A person needs to look at buying this while still healthy and it is best (cost wise) to do so before retirement. Do people ask what happens if I don’t use it? Yes, yes they do. It is the same as your home insurance or your car insurance. You are buying protection, but there is nothing back if you do not use it. (Some policies do have a Return of Premium benefit, however, this is not the norm).
  2. Life Insurance with a Long Term Care benefit. I am an enthusiastic supporter of this type of policy. So many win-wins with this one that I could not mention them all. But in short, a person has a Long Term Care benefit, often 3x the Death Benefit and if they do not use the Long Term Care benefit, the money is paid out as a Death Benefit. It is often less costly than the formerly mention LTC insurance and the benefits are by-and-large better. It takes some explaining, but if a person needs life insurance … this type of policy should at least be looked at.
  3. Annuities that have a Long Term Care Benefit. This involves putting money in an Annuity that will pass to their heirs. However, if needed for LTC, it will often pay out an amount greater than the money they have in the Annuity. It is easier to purchase than Life Insurance but obviously requires having the money to do this.

The main thing is, a person needs to examine this part of their planning. I am here to help you do this. Just shoot me an email or give me a call at 209-390-1163.

Michael P Myers

  • Phone: 209-390-1163
  • California License: 0561502

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