November is Long-term Care Awareness Month. Long-term care insurance or LTCI is one of the most neglected types of insurance. When people think about the kind of insurance they need to buy, they usually think about life insurance, auto insurance and health insurance, but LTCI isn’t usually taken into consideration. It may not get as much attention as other types of insurance, yet most of us will likely need it at a certain point in our lives for ourselves, our spouse or our parents.
LTCI is a special type of insurance policy that pays for the expenses related to the care of a person who can no longer take care of themselves due to sickness, disability or advanced age. It covers expenses that health insurance policies typically won’t cover and takes over the payment of services that a health insurance policy might only cover for a short period of time. Many people think that LTCI is only for the elderly, but anyone can experience an unexpected accident or debilitating disease that might require a need for long-term assistance. Like most insurance products, buying LTCI when you are younger means the premiums will be cheaper.
Many people ask if LTCI is really necessary. The need for this type of insurance becomes clear when you take a look at how much long-term care costs. On average, people needing long-term care spend anywhere from $15,000 to over $80,000* per year depending on the level of care required. Expenses like these can be financially disastrous for a family as well as devastating to the patient’s quality of life.
For people with a low enough income to qualify, protection can be obtained through the Social Security Administration’s Medicaid and Social Security Disability Insurance programs. However, Medicaid can be restrictive and the amount of money it pays to service providers may limit your options, while SSDI can take months or even years before an application is approved and benefits paid.
Many Hispanic families have the tradition of caring for their elders. Purchasing LTCI on behalf of your parents is a way to protect yourself from the financial burden of caring for them as the cost of care continues to rise. It also ensures that you can keep your promise to your parents of providing for them when they most need your assistance. While it’s true that LTCI policies can be expensive, it’s important to note that the premiums may be tax deductible.
When evaluating LTCI, keep in mind that it’s not just for you. It can also work for your parents or other loved ones for whom you will be responsible in the future and will need your financial support. LTCI can help you keep your promises to care for loved ones without sacrificing your retirement and quality of care in the process.
For additional information about LTCI visit www.lifehappens.org.
* 2012 median annual rate for a private nursing home room, Genworth 2012 Cost of Care Survey