Many people think that Long Term Care insurance is just for people who are in their 70s and 80s. That is not necessarily the case. Roughly 40 % of people who need Long Term Care are under the age of 65. They suffer accidents or early onset of disease.
I know from experience that the ability to function does not wait until someone is over 65 to decline. My father, older brother and oldest sister were all in their 50s when they suffered from Huntington’s disease. Two of them ended their days in a nursing home at the expense of Medicaid. My brother-in-law cared for my sister until she finally passed away in her sleep.
Huntington’s disease not only causes a personality change in its victims. It also robs them of control over their bodies. They need help to perform the simple tasks that most of us do without even thinking.
Obamacare had a section in it called the “CLASS ACT.” As Baby Boomers age, the need to provide Long Term Care to this segment of the population will increase. CLASS was designed to help with our nation’s future Long Term Care crisis.
In October of 2011 the Secretary of Health and Human Services finally admitted that the CLASS plan was unworkable. Although Mr. Obama is reluctant to allow the CLASS portion of Obamacare to be repealed, CLASS has been suspended indefinitely. The current administration is not willing to spend any more time, money or effort towards solving a future financial crisis.
With the death of CLASS, Americans must use options that already exist to pay for future Long Term Care needs.
People who wish to rely on the government to pay for Long Term Care can still plan on Medicaid. For every dollar that Medicaid spends on health care for the poor, it spends almost $ 3 on Long Term Care for the poor and middle-class.
Each state has its own criteria for participation in Medicaid. In most cases, people who are in the middle-class must “spend-down” their assets before they qualify for Medicaid help.
Some people have elected to use their retirement savings to pay for Long Term Care. Your ability to self-pay is going to depend on your level of need. If all you need is a few hours of home care each week, you may be able to afford to pay out of your retirement savings.
If, however, you need supervision and help around the clock either at home, an assisted living facility or skilled nursing home, your retirement savings are going to take a beating before Medicaid will help.
There are a few types of insurance policies that will help you. For the most comprehensive coverage, I recommend a Partnership qualified policy.
If you feel that you cannot afford premiums for a full Partnership qualified Long Term Care policy, you may want to consider a Life insurance policy with a Long Term Care rider. They are not as comprehensive as a full Partnership plan but they are normally less expensive. If you think that you will still have a need for Life insurance when you are in your 80s, you may want to consider a permanent Life insurance policy with a Long Term Care rider.
If you do not want to pay premiums for either Long Term Care or Life insurance, there is another option that you may consider. It is called a Hybrid Annuity. What it does is take a portion of the money that you have saved for retirement in a fixed rate CD. By moving the money from a CD to a Hybrid Annuity, you can leverage your money for Long Term Care.
Changes were made to the U.S. tax code a few years ago. Insurance companies are allowed to double or triple the amount of money that you have in your annuity for Long Term Care. If you suffer a loss of 2 of the 6 Activities of Daily Living, you can use the money that is in your Hybrid Annuity to pay for Long Term Care expenses on a tax-favored basis.
It is important for you to remember that there are limitations. If you rely on Medicaid, you can only get the level of care that Medicaid says is appropriate. If you self-pay, the retirement savings that both you and your spouse set aside for your golden years runs the risk of being depleted. After the sick spouse dies, if all the retirement savings were used for Long Term Care, the surviving spouse must live the rest of his/her life on a fixed income.
If you elect to use insurance to plan for your future Long Term Care needs, you need to make certain you have the right type of insurance. Most major medical health insurance policies will only pay for Long Term Care when it is incidental to skilled nursing care.
If you still have more questions than answers about Long Term Care, get a copy of FAQs You Should Know Before You Buy Long Term Care Insurance. All you need to do is click on the link. I have recorded many of the questions that I have needed to answer about Long Term Care insurance over the years.