What would you do if you were suddenly faced with an additional yearly expense of $30,000 to $60,000 because of unexpected health care needs?
The U.S. Department of Health and Human Services predicts that more than 70% of Americans over the age of 65 will need long-term care services at some point in their lives.
- U.S. Department of Health and Human Services: Risks and Financing Research Brief, February 2016
Among them, 40% are anticipated to require nursing home care and 20% will need that level of care for at least five years. But how do you plan for a significant expense you may or may not experience in your lifetime?
Many of us fear the financial consequences of a long-term illness, but are unsure about how to protect ourselves against it. What if your current health insurance policy only covered a small part of those costs?
This prompts the following questions:
- How long could you afford these additional expenses?
- How would these unexpected expenses impact the estate you hope to leave as your legacy?
- How would you and your family's lifestyle be affected while you are sick?
What Does LTC Insurance Cover?
Long-term-care insurance provides hands-on medical or personal care services if you should become unable to care for yourself due to prolonged disability, illness or cognitive impairment. LTC insurance covers at-home care as well as care received in a community setting.
A long-term care policy can be an affordable and effective solution for answering the above questions. Depending on the policy, LTC insurance may cover skilled nursing care, either at home, in an assisted living facility, an “adult day care” and/or a nursing home. Policies cover personal care services such as grooming, bathing, and dressing. LTC insurance may cover home modification to enhance your at-home living experience if you become unable to move around freely. Certain policies can also provide a health care coordinator to help determine your needs, find service providers, and arrange care. 
Medicare and Medicaid While Medicare and Medicaid may provide some long-term care coverage, there are severe restrictions on just what is covered. For example, Medicaid does not cover in-home care, and generally applies to only those with very limited assets. If you have resources available to pay for LTC, you would have to deplete all of your assets order to qualify for Medicaid.
Bottom Line
Americans are living longer and more productive lives well into their retirement years, but longevity poses certain financial risks. A long-term-care insurance strategy ensures you will receive adequate care when – and where – you need it.
Put a plan in place as early as possible to help ensure you won’t outlive your income. The younger you are when you purchase a plan, the less costly the premiums. The earlier you plan, the longer your assets have for potential growth to help outpace inflation.
Work with a financial advisor to find ways to save for future LTC expenses and explore the pros and cons of purchasing a long-term care policy. We’re available to answer any questions you may have.