Whether you’ve retired yet or not, it may be time to start thinking about getting long-term care insurance. Doing so could save you a lot of headache now and in the future.
In this article, we’ll define what long-term care is and then explain seven reasons you might want to start planning your long-term care coverage now.
Let’s get started!
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What is long-term care?
Long-term care refers to getting help with activities of daily living (ADLs) over an extended period of time.
ADLs can include dressing, eating, bathing, going to the bathroom, and more. Reasons you might need help with these activities over a long period include old age, disability, injury, disease, and mental illness.
Most people need long-term care at some point. The most common reason is simply that you eventually get too old to take care of yourself.
So the real question isn’t if you’ll need long-term care but when you’ll need it.
Many people put off planning their long-term care because they don’t want to think about losing their ability to live independently or because they simply don’t know enough about it.
But the truth is that the sooner you make a long-term care plan and get long-term care insurance, the better. Here’s why:
1. Your health insurance probably doesn’t cover long-term care
Source: moneycontrol.com
Most health insurances don’t cover long-term care. Unless your plan has a special long-term care component, it probably doesn’t cover it either.
Medicare will cover some long-term care services, like hospital care, doctor services, and medical supplies, but the coverage is limited.
As for Medicaid, it will only cover some long-term care services, like nursing homes, in-home care, and community-based services. However, you must be 65 or older, spend down your assets (the asset threshold varies by state, but most require your assets to be worth $2,000 or less), and make less than $2,742 per month (in 2024).
2. The sooner you get long-term care coverage, the lower your premiums will be
As a rule, long-term care insurance costs go up with age. That’s because the chances that you’ll need to claim a payout are greater as you get older.
According to the American Association for Long-Term Care Insurance (AALTCI), the annual rate increase for long-term care insurance is generally about 2-4% in your 50s and then 6-8% in your 60s. That’s why the AALTCI suggests the best age to apply for long-term care is in your mid-50s.
Plus, long-term care insurance rates follow the rise of inflation. So the sooner you lock in a rate, the better.
3. You can get coverage for the unexpected
Source: blog.dol.gov
Another reason you shouldn’t put off long-term care insurance is that you’re not covered while you wait.
If something happens to you in your 50s that requires you to get long-term care and you aren’t covered, you’ll need to pay for it out of pocket.
For example, you may experience a debilitating accident or your physical health might take a sudden dive for the worse.
You never know what will happen. So it’s better to be safe than sorry.
4. You want to stay at home as you age
Most people don’t want to live in a retirement or nursing facility when they get old. They want to stay home.
In fact, according to The John A. Harford Foundation, 71% of older adults are unwilling to live in a nursing home in the future. If you count yourself among them, you need to be proactive about your long-term care plan.
The right long-term care insurance may allow you to get the care you need at home through medical and non-medical in-home caretakers.
So plan now how you want to age.
5. You don’t want to tap into your life savings to pay for long-term care
Source: thestatesman.com
Your retirement nest egg is designed to pay for regular living expenses in your old age. If you’re forced to tap into it to help pay for long-term care, you may end up running out of money while you’re still alive.
That’s what makes long-term care insurance so valuable. It covers your long-term care costs, no matter how large, so that you don’t need to dip into your life savings just to survive.
6. You don’t want to burden your kids
Without long-term care coverage, your kids may feel obligated to pay for your long-term care or take care of you personally. This is a lot to ask even if your children are able.
Why? Because your kids probably already have a lot on their plate between their own children, careers, and personal lives.
By getting long-term care coverage, you avoid burdening your children with the responsibility of taking care of you.
That said, if you must rely on your children for long-term care and you qualify for Medicaid, consider applying for FreedomCare. It allows family members to become your official in-home caretaker and get paid for it.
7. You want to leave an inheritance to your kids and grandkids
Source: stateofreform.com
Lastly, relying on your retirement savings or Medicaid to pay for your long-term care won’t leave you with much to pass on to your kids or grandkids.
Leftover retirement savings are what most people leave as an inheritance, and Medicaid requires you to “spend down” your assets before it will help pay for any long-term care.
So if you plan to leave an inheritance, you better get long-term care insurance.
The bottom line
As you can see, there are many benefits to planning your long-term care early.
After all, the key to a successful and fulfilling life is to keep a long-term perspective. If you’re only ever planning for the short term, you’ll find yourself constantly putting out fires instead of enjoying life to the fullest.
So take charge of your long-term care plan now so that your transition into the golden years of life will be as smooth as possible! You’ll be grateful you did.
