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The Growing Importance of Long-Term Care

November 17, 2016
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The need for long-term care is unpredictable and, though many consider it to be something needed in the later years of life, can happen at any age. In fact, according to the U.S. Department of Health & Human Services, about 40% of people currently receiving long-term care are adults aged 18-64 years old. It could be needed after a car accident, due to a sports injury, following a stroke, or due to Alzheimer’s.

Long-term care can be a huge financial burden on your family, especially if a family member becomes a full-time caregiver. Knowing the possibilities of long-term care financial options ahead of time can help you avoid the stress of making sudden decisions and experiencing lasting financial harm. 

According to the U.S. Department of Health & Human Services, the number of older Americans needing long-term care services is projected to increase to 12 million by 2020, with nearly 70% of Americans over the age of 65 needing long-term care at some point. The goal of long-term care services is to help individuals maximize their independence and function at a time when they are unable to be fully independent, needing help with at least two of the six Activities of Daily Living (ADL) which are:

  • Bathing
  • Dressing
  • Using the toilet
  • Transferring to or from bed or a chair
  • Caring for incontinence
  • Eating

Long-term care insurance policies fund retirement plans with pennies on the dollar plus tax-free benefits. Most policies have five basic components:

  • Benefit amount: this is the maximum amount the policy will pay per day or per month for the benefits the policy provides
  • How benefits are paid: the options are usually either through reimbursement, daily indemnity, or cash
  • How long benefits are paid: this is the benefit period, generally anything from two years to lifetime benefits
  • Elimination period: often viewed as a deductible, this is the period of time you’d have to pay out of pocket care before the insurance company begins to provide coverage
  • Inflation protection: with this feature, the policy keeps buying power in the future if LTC costs increase at the same rate as the policy’s inflation option

There are a lot of options when it comes to long-term care coverage, and there are likely many questions you might have about this important topic. Please feel free to reach out to me so we can discuss how these policies might be able to help you create a holistic financial strategy for your future and protect you and your loved ones.