Despite the many challenges of 2020 and the global pandemic, many of us are fortunate to have remained in good health – but others are not so lucky. Especially as the country faces an aging population, many families must travel to nursing homes or adult care facilities to see loved ones who require long-term care.

Defining Long-Term Care

Long-term care is a broad term for all the informal and formal health-related services that are required for individuals who are unable to perform the tasks of daily living. While this does include nursing homes, long-term care is more than that. It can include preventative care, rehabilitation, or therapeutic care, and it can take place in one’s personal residence, a rehab facility, personal care facility, or any other form of adult care setting.

Costs are High

Unfortunately, long-term care doesn’t come cheap. In fact, the cost of care is often well above the amount for which individuals or their families have saved. Medicare does cover some long-term care costs—20 days paid in full, followed by 80 days with a copay requirement—but there are further stipulations that make Medicare an unattractive option for long-term care.

Long-Term Care Insurance Solutions

There are other ways, however, to be prepared for long-term care without wiping away your life savings. Long-term care insurance is specifically designed to alleviate the expenses of long-term care other types of insurance may not cover. Generally, a policy will cover part of the cost of long-term care for at least 12 consecutive months in any setting other than a hospital.

There are a variety of policy options ranging from nursing home-exclusive plans to all-encompassing plans with different care location options to home care-only plans. Depending on the specific policy and company, individuals can receive any combination of daily/monthly benefits, inflation protection guarantees, and waiver of premium and pre-existing condition restrictions. Most policies are reimbursement policies that offer payment for out-of-pocket costs, but other plans pay a set daily or monthly amount to be used for long-term care.

Leveraging Life Insurance

Another unique and attractive plan is to combine long-term care insurance with a cash value life insurance policy. In this hybrid method, a portion of the death benefit or cash value can be used to fund long-term care expenses, which would result in a guaranteed death benefit, even if long-term care benefits are never used.

If a certain life insurance provider does not allow a long-term care insurance rider, individuals can plan to use any cash value received to purchase a long-term care insurance plan, which would qualify as a non-taxable exchange.

Creating Peace of Mind

While the costs of policies can be high, those who are insured gain the ability to plan for their own future care. Long-term care insurance can offer flexibility to choose the type, location, and depth of care before any health issues even arise. Ultimately, what long-term care insurance offers is peace of mind and financial security in the event long-term care is required.

Contact Us

Without proper planning, unforeseen circumstances can cause unnecessary financial and emotional burdens on families and their loved ones. For more information on how to plan for your future, please contact us via our website, or call a member of our tax team at 513.241-8313.