Home » Columnists » Long Term Care- Biggest Challenge Americans will ever face

Long Term Care- Biggest Challenge Americans will ever face

Sudhir Mathuria

Americans routinely buy all sorts of insurance — for cars, homes, health and even pets and boats.
But when it comes to long-term-care insurance, relatively few sign up. Out of more than 313 million Americans, only about 8 million have any such protection, according to the American Association for Long-Term Care Insurance. The low participation rate largely reflects the high cost of long-term-care insurance.
Geneva Hunter, 66, is among those without protection. She is well aware of how helpful it would be to have such insurance. She gets schooled on that point each day: Her 89-year-old mother, Ida Christian, who has Alzheimer’s disease, lives with her.
“I do not have [the insurance] because at the time it was offered [through my company], I could not afford it and take care of my mother at the same time,” said Hunter, a member of one of three families being profiled by NPR in a series called Family Matters: The Money Squeeze.
“I think it was close to $400 a month,” Hunter said. “That’s a lot of money when you are caring for somebody else.”
But with each passing birthday, Hunter feels more pressure to buy insurance. “I know it’s expensive, but I have to do it,” she says, because she fears becoming a financial burden to her daughter.
Many Americans share that financial goal: to not burden others. But the reality is that each year, an estimated 11 million U.S. adults need some type of long-term care.
Such care can be crushingly expensive: Just one hour of home-health-aide care costs roughly $20, while the average private nursing home room costs $87,000 a year. Neither routine employer-based medical insurance nor Medicare will pay for extended periods of custodial care.
Scott Hawkins, 46, and a member of another family in the NPR series, says he hasn’t yet explored getting long-term-care insurance. In fact, future elder-care costs are so daunting that only humor can help defuse the ticking financial bomb.
For the nation’s roughly 78 million baby boomers, the time for humor about who will prepare their meals is quickly running out. Many boomers, people born between 1946 and 1964, are expected to fall so far into poverty trying to provide themselves with paid care that they will qualify for Medicaid — the medical care program for the deeply impoverished.
A fortunate few will have long-term-care insurance, but even that option is looking sketchy as more companies exit the business. Insurance giants such as Prudential and MetLife have recently pulled back from offering long-term-care policies. Others, such as John Hancock and Genworth Financial, have turned to state regulators, seeking permission to dramatically hike premiums. Depending upon the location, the insurers’ requests for higher rates have been for amounts such as 18 percent or 40 percent or, in a few cases, 90 percent.
Long-term-care insurance typically covers out-of-pocket expenses that come with home care, assisted living and nursing homes. Most policies have a waiting period that works like a deductible. So if you need the help of a home-nursing aide, you may have to wait 90 or 120 days before your benefits start to cover those costs.
So there are three ways to plan for Long Term Care.
1) The American Association for Long-Term Care Insurance says people should expect to pay an average of $3,335 per year to cover a couple of healthy 60-year-olds on a plan that pays out a $150 daily benefit for up to three years. But prices can vary dramatically, depending upon factors such as the purchasers’ age, the level of inflation-adjustment protection and whether the daily benefit will be $100, or some larger amount, say, $150 or $200.
2) Asset-based- on life insurance chassis. Under this planning if for some reason if you do not happen to receive any long term care policy value goes to beneficiary tax free.
3) Annuity based where one can get two and half to three times of the annuity amount as long term care.
To understand various Types of Life Insurance and its Planning contact Sudhir Mathuria @ 713-771-2900.


More news

Leave a Reply

Your email address will not be published. Required fields are marked *