LONG TERM HEALTH CARE – FACTS AND MYTHS

LONG TERM HEALTH CARE – FACTS AND MYTHS

Since the previous generation Long Term Health Care has changed in America in regards to the way people retire. Years ago, long term heath care was less expensive, children were living close to home and long term health care 1could take care of their parents, and life expectancy was shorter. The Bureau of Labor Statistics states that the average 50 year old today will need an additional $1.4 million dollars to live until the average age today of 81. The lucky few will need an additional $630,000 extra to live to age 100. Many of the myths of the past, some based on previous times, are no longer valid.

My children will take care of me. It has been a common practice in the past for children to take care of their parents. Today, both parents typically have to work to pay the bills, and the same is true for their children. The children do not have the time to take care of the parents today. In many cases in this modern age, the children do not live in the same city as the parents. So even though children would like to help take care of the parents, it is not possible.

Medicare will pay for my nursing home. long term heath care 2   Medicare does not pay for nursing home care. The maximum Medicare will cover is the first 20 days at 100% coverage, but it is just for skilled care nursing, and not regular nursing home care.  

Medicaid will pay for my nursing home. long term health care 3Medicaid will pay for your nursing home, but only after you deplete all of your assets and leaves you with approximately $2000 if you single or $3000 if you’re married. People who have a high net worth have to spend approximately everything they have on Long Term Care before Medicaid will take care of them. When you in the nursing home under Medicaid, you will just have $40 a month to spend.

My health insurance will pay for my nursing home. Private health insurance does not pay for nursing home care, it is just for doctor and hospital expenses.

I will use my own assets to fund my nursing home care. long term health care 4You will have to have a very high net worth to self-fund your long term care. For example if you had 6 million dollars and invested it in a Certificate of Deposit at an interest rate of 1.5% you would make $90,000 a year, and your tax may be approximately $18,000 dollars leaving you approximately $72,000 which may pay nursing home care for one person. If you and your spouse needed long term care you may need 12 million dollars at today’s interest rates. If you self-insure you may have to sell at the bottom of the market and lose money, as many people did in the crash of 2008. You may find it easier to simply buy a long term health care policy for you and your wife that will give both of you both coverage at discounts up to 40% for pennies on the dollar.

I am too young to buy Long Term Health Care Insurance. Long Term Care can happen at any age. Today, 40% of people who need Long Term Care are between the ages of 18 and 64. Statistically, the number of people under 65 in nursing homes is a astounding 22%.

Long Term Health Care is too expensive to buy. long term health care 5The younger you purchase Long Term Care, the lower your premiums will be. Many people who do not buy long term care policies when they are younger and healthier develop medical conditions and are refused coverage later by the Long Term Health Care Insurance companies. You will pay less in the long run if you buy Long Term Care Insurance when you are young, and the policy will be worth much more because it will compound much more. Example from the New York State Department of Financial Services with the following details Genworth 8000 NYP $300 a day/ 2 years nursing home / 4 year home care/ compounded 3.5%/ elimination period 90 days/ partnership policy/ male/ age of purchase 55 and 65 :  

    • Age 55 premium:          $2767 Total Premiums paid by 85: $83,010     ($2767 x 30 years)
    • Initial Value of Policy:           $219,000   ($300 a day x 365 x 2 years)
    • Value of Policy at 85 due to 3.5% compounding:       $438,000

 

  • Age 65 premium:          $4415 Total Premiums paid by 85: $88,300     ($4415 x 20 years)
  • Initial Value of Policy:          $219,000   ($300 a day x 365 x 2 years)
  • Value of Policy at 85 due to 3.5% compounding:      $547,000

As can be seen, the earlier you buy the policy, the less you pay in premiums, and more importantly you benefits are larger. Fill out the form below to be mailed comprehensive quotes from all the “blue chip” companies in the Long Term Care field, in the comfort of your own home, rather than just talk to a local “high pressure” agent that carries a limited amount (1 or 2) of companies.

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