Long-Term Care: Things to Consider
Baby Boomers started turning 65 in 2011, and the number of older people will increase dramatically during the 2010 to 2030 period. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million. And nearly 70 percent of Americans 65 and older will need long-term care at some point, according to the U.S. Department of Health and Human Services.
One of the many health issues one might encounter is Alzheimer’s, which has become a leading cause of needing long-term care. About one in four LTC claims are attributed to Alzheimer’s, according to the Society of Actuaries. Other claims are attributed to physical issues ranging from chronic illnesses to injuries and disabilities.
According to one study, 74 percent of American couples are concerned about unexpected healthcare costs in retirement. However, less than 40 percent have considered the impact of potential healthcare costs on their retirement savings and an even smaller percentage have factored it into their retirement plan.
Long-term care insurance is one of the most complex types of insurance you may consider purchasing. Part of the problem is that people aren’t always aware of the options available to them. It is important to research the options, and educate yourself and plan accordingly.
Here are some vital basics for you to consider:
What is the benefit amount?
Policies normally pay benefits by the day, week, or monthYou may want to evaluate what long-term care facilities in your area are charging before committing to a policy.
What is the maximum benefit amount?
Some policies limit the total benefit they’ll pay over the life of the policy. This could be stated in years or in total dollar amount.
How are benefits triggered?
Insurance companies use certain criteria to start benefits. Commonly, this is an inability to do a certain number of the activities of daily living without assistance. Many policies have benefits for Alzheimer’s disease as well. There are more questions that should be asked of your considered provider so that you can get a full picture of the available benefits.
Another important thing to consider is that having an alternative safety net at your disposal (investments for example) will offset the potential costs of long-term care. Think of it as a savings account for the out-of-pocket costs that may be incurred during a scenario where long-term care is required.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC