The Importance of Long-Term Care Insurance
Doing your homework may have great benefits.
Americans are less prepared and less confident about retiring comfortably than ever before says the Insured Retirement Institute’s (IRI) 6th Annual Report on The Retirement Preparedness of the Boomer Generation. According to the report, just 24 percent of baby boomers are confident that their savings will last as long as they will.
This drop in retirement confidence is partially due to worries over health care spending and the potential cost of long-term care as life spans continue to increase. According to Forbes, “While most retirees will have access to Medicare in retirement, it will only cover roughly 60 percent of retirement health care expenditures, putting a large out-of-pocket burden on most retirees.”1
In addition to health care expenditures, retirees must also consider the rising costs of long-term care, which Medicare is not designed to cover. Let’s look at the numbers: As of July 1, 2013, there are 44.7 million Americans age 65 and older. There is a 70 percent chance that someone turning 65 today will need long-term care services at some point in their remaining years. The median monthly cost for a semi-private room in a Florida skilled-nursing facility is $7,300 and $8,060 for a private room; while the median monthly cost for a private apartment in a Florida assisted-living facility is $3,150.2
Although insurance can be a potential solution to help mitigate the financial impact of paying for care, the rising cost of long-term care is of great concern to retirees. Long-term care insurance policies cost less if purchased when you are younger and in good health. If you’re older and/or have a serious health condition, you may not be able to get coverage-and if you do, you may have to pay considerably more.
The occurrence of a long-term care need for a married couple can be catastrophic if one spouse must still survive financially while the other requires convalescent care. Proper advanced planning with an attorney that specializes in senior issues or a financial planner will be of considerable value. Additionally, many states have partnership programs that allow the healthy spouse to retain assets to live on if the other has to rely on Medicaid for uncovered expenses.
In conclusion, there are a number of ways to purchase long-term care insurance such as various waiting periods, benefit periods, riders, etc. You most likely don’t need as much coverage as you think. Do your homework and work with an experienced, competent professional.