Planning for long term care can be a confusing, overwhelming process. Long term care, “is designed to cover long-term services and supports, including personal and custodial care in a variety of settings such as your home, a community organization, or other facility… You can select a range of care options and benefits that allow you to get the services you need, where you need them.”1 For some, long term care insurance is a necessary addition to their retirement plan.
Even if financial reasons are not a concern, long term care offers an extra level of convenience, both for the person using it and for their family.2 For example:
- The assistance provided by a third party to help with care funding and care coordination is often very helpful for families with multiple children who may struggle to agree on care options for their loved ones.
- Some like to think of long term care insurance as a coupon or discounted rate for care services. The insurance will not cover all of their costs, but it will provide a significant discount.
- Long term care provides “guilt-free” care. Many people have difficulties with the idea of paying cash for their care. It seems easier to allow insurance to cover all or most of those costs than to write a personal check.
- Many long term care policies come with care coordination. Care coordinators work with the policy holder, their families and medical providers. They can be a helpful resource and a good place to start when care is needed.
There are plenty of options to consider when purchasing long term care insurance and research is required to make the best decision possible for your needs. There are also some common mistakes policy owners make when shopping for long term care insurance2.
- Overbuying benefits- Purchasing insurance to cover 100% of possible care needs can come with a substantial cost. Speak with your financial adviser to see what options you have and discuss the best value for you.
- Not taking into account possible tax incentives- You may be able to pay the premiums through Health Savings Accounts and deduct them as a health insurance expense through a business.
- Medicaid planning- Medicaid should be viewed as a safety net, not a crutch. Medicaid benefits will continue to be strictly controlled in the future.
- Predicting future performance- New long term care policies tend to have lower rates due to the current lower interest rates.
- Not conducting periodic policy reviews- Policies need to be regularly reviewed to see if the pricing and benefits are still reasonable.
Long term care choices are abundant, but working with a financial advisor you trust and evaluating your lifestyle and finances ahead of time will make the process easier.
If you’re looking for a way to enhance your financial security, one option is through a Home Equity Conversion Mortgage (HECM) loan, also known as a reverse mortgage. A HECM reverse mortgage allows homeowners age 62 and older to convert a portion of their home equity into cash that can be used for any purpose such as paying off debt, paying for home renovations or funding extra expenses such as long term care. For more information or to talk with a reverse mortgage advisor, call 866.751.6105 today.