Nearly 70% of seniors aged 65 and over need long-term care at some point in their lives, yet most aren’t prepared for the financial burdens of this type of care. Depending on your age, you might not have given the possibility of long-term care (LTC) much thought. You might also assume your health insurance will cover it.
Unfortunately, healthcare policies often exclude most — if not all — LTC services. The cost of care is high and can quickly deplete resources you intend to pass on to your heirs. We’ve seen too many people caught off-guard when they or their life partner require long-term care. Here are a few suggestions for how to prepare for LTC so that you don’t find yourself in the same situation.
Start Planning Early
The earlier you begin planning, the better prepared you’ll be. First, you never know when you will need this type of care. Though seniors are more likely to require it, LTC is also often necessary after a severe accident or chronic illness. Second, preparing sooner rather than later offers more opportunities to establish the funds for care and safeguard your heirs’ inheritance.
Purchase Long-Term Care Insurance
LTC insurance can prevent you from paying out of pocket for services. The coverage typically pays for the care your health insurance doesn’t cover, but not all policies provide the same benefits. As you shop around for policies, consider the following:
- Benefit duration: How long does the policy cover services? Insurers no longer offer policies covering benefits for the rest of the insured’s life. Typically, the longest coverage period is five years.
- Waiting period: Most policies allow you to set up a waiting period before the policy pays benefits after you become eligible for them. The purpose of the waiting period is to reduce or lower the deductible. Be sure to look at the insurance company's method to calculate the policy’s wait time.
- Benefit eligibility: Identify a policy with amenable terms for benefit eligibility. There are differences between tax-qualified and non-tax-qualified policies in when you can begin receiving benefits.
- Daily benefit limits: Investigate how much the policy pays for each service it covers. You should also look into when it pays for these benefits, as it may pay on a weekly or monthly basis.
- Maximum benefits: Like all insurance policies, LTC insurance has a cap. Make sure you compare the maximum benefit amount for the policies you consider.
You should also find out if you can purchase inflation protection. Depending on your age, the extra expense may be invaluable.
Establish an Incapacity Plan
An important component of estate planning is incapacity planning. Planning for the possibility that you or your life partner may need long-term care gives you the power to establish the decision-making and financial resources before you need them. A financial power of attorney and a revocable living trust are essential for protecting your finances. A healthcare power of attorney, living will and HIPAA authorization are necessary for establishing your wishes for care.
Talk to an AmeriEstate Partner
AmeriEstate partners are here to help you ensure you have your legal documents in order. We believe everyone has the right to dignity and quality long-term care without risking financial stability for themselves or their heirs. Contact us today to talk to one of our partners about preparing for LTC.
Sources:
https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
