Long Term Care
With more individuals reaching age 65, along with extended life expectancies, comes the increased probability that a long term illness may require the liquidation of cash assets to pay for the increasing costs associated with medical care.
Unfortunately, even the most comprehensive estate and financial plans cannot provide any guarantee that the cash assets accumulated during one’s lifetime won’t be depleted in the event of a long term illness.
Long Term Care provides a daily insurance benefit if the insured is unable to perform two of six Activities of Daily Living (ADLs) ie, bathing, dressing, toileting, transferring, continence and eating. Benefits for dementia and/or Alzheimer’s do not need to satisfy the 2 of 6 ADLs.
When designing a LTC program, the four items which should be chosen include:
- Daily benefit amount
- When benefits should begin for in home care and facility care
- How long benefits should be paid
- Cost of living increases/Inflation Protection – Simple or Compound
Many policies are designed to require a 90 – 100 day waiting period for benefits to be paid for in-home care. The Traditional Long Term Care plan recommended has no waiting period for in-home care benefits to be paid.
Different plans can be designed to provide lower or higher daily benefits, shorter or longer waiting periods for benefits to commence and inflation protection can be either “none” or “compound”.
Premiums can be discounted as much as 30% for married couples.
Based on today’s costs for care, a typical plan design would provide a daily benefit of $250 ($7,500 per month), benefits begin following 90 days of illness for facility care and a zero day wait for home care. Benefit options usually are payable for 3 years or 5 years and a 3% compound inflation benefit is typically included.