The cost of long-term care can come as a debilitating shock to individuals that have otherwise managed their finances responsibly throughout their life. A person turning 65 today has a 70% chance of requiring some form of long-term care and with costs starting from $4,300 per month for assisted living to $8,821 for a private room in a nursing home, having a plan to pay for it is crucial.
Long-term care insurance is one of four common ways people mitigate the costs of long-term care. The other three are paying out of pocket, relying on Medicare (which covers up to 100 days of “skilled nursing care” per illness), or organizing assets in order to qualify for Medicaid when the need for care arises. Each of these strategies has its place and determining which is best for you depends on your personal and financial circumstances. While this article offers insight into when long-term care insurance might be your best option, it is always best to build your plan in conversation with an experienced estate planning attorney and trusted financial advisors.
When to Consider Long-Term Care Insurance
Long-term care insurance, like any other kind of insurance, comes at the cost of a monthly or yearly premium. The amount that you can expect to pay varies widely as long-term care insurance policies come in as many shapes and sizes. Crucial factors that influence the premium you can expect to pay include your age, the benefit period, and the level of benefits, among other things. This said, long-term care insurance can be expensive and therefore may not be for everyone.
Individuals who have the resources to self-insure without needing to worry about going broke may choose to avoid the high cost of insurance premiums. On the flip side, if paying for insurance is beyond your budget you may be better served by seeking to qualify for Medicaid. Long-term care insurance may be most useful if your circumstance falls in between these two cases or if preserving your estate for your heirs is a central priority in your estate plan.
One exceptional circumstance in which you might consider long-term care insurance concerns family health history. If you know Alzheimer’s runs in the family or if you have reason to worry about other debilitating hereditary conditions, you may want to purchase long-term care insurance to shield against the extreme cost of requiring extended nursing home care.
Long-term care insurance, like most types of insurance, is ridden with unknowns. Speak to your insurance provider about the availability of policies that provide a death benefit in the event a need for care never arises, the amount paid for insurance may turn out to be a bargain if an extended nursing home stay is in your future. Because no one has a crystal ball to see the future, many factors play into the decision to include long term care insurance in your planning. You may consider long term care insurance a viable option only if you can comfortably pay the premiums even in retirement, don’t have the resources to self-insure, and feel strongly about preserving your estate for future generations.
Contact the Estate Planning Law Group of Georgia
To learn more or to address any of the items listed above, don’t hesitate to reach out and schedule an appointment with the Estate Planning Law Group of Georgia before the end of the year!