Long-Term Care Insurance: Myths and Misperceptions

A recent series of NPR interviews discussing long-term care for aging baby boomers made it painfully clear how ill-prepared this generation is for old age. For many boomers, a long, slow decline would quickly deplete their resources. For better or worse, modern medicine has increased our longevity. It’s great if you remain healthy and have the financial resources to enjoy your life. For many, however, these final years mean chronic illness, dementia and disabilities. Long-term-care insurance helps people cope with the cost of this care. It pays for the basics–bathing and dressing–to skilled care from therapists and nurses that can last for months or even years.

The best time to buy LCTI?

Consider LCTI when you’re still young and vigorous to leverage lower premiums and better underwriting. Best of all, LCTI is more affordable than you think!

Below are some of the myths and misperceptions associated with the coverage and costs of long-term care insurance.

Myth #1: The government will pay for long-term care

The reality. This may be the most common misperception about LTCI. Medicare is a wonderful program, but there are limitations to both Medicare and Medicaid. Neither was designed as a form of long-term care.

• Medicare generally covers skilled nursing home care after a hospital stay of at least 3 days, and
its coverage for other long-term care services is very limited.
• Medicaid does contribute toward long-term care, but requires recipients
to use their income
to pay for care and spend down most of their assets to qualify.

Myth #2. Consumers are not interested in LTCI until they’re older than 55.

The reality. Initial interest begins below age 50, generally triggered by someone who either needed it and didn’t have it or was affected by it. Time is on your side. Advantages for younger policy owners:

• The opportunity to compound benefits over time
• Lower premiums
• Better underwriting results

Myth #3. Most people won’t need LTCI

The reality. At least 70% of people over 65 will need long-term care services and support at some point.

Myth #4. I will pay for long-term care myself.

The reality. The median annual cost of home health care exceeds $45,000. In just 2-3 years that would impact any portfolio. An LTCI policy can help people preserve their wealth for its intended uses.

Myth #5: I don’t need LTCI because my family and friends will take care of me.

The reality. Family and friends often are more than willing to help out. Yet research shows that being a caregiver will likely have a negative impact on their financial and emotional well-being.

• 60% of caregivers had to cut their discretionary spending
• 46% said providing care impacted their health and well-being.

Myth #6: Health insurance and disability insurance are good substitutes for LTCI.

The reality. Neither health nor disability insurance was designed to cover long-term care.

• Health insurance is designed to cover short-term acute care such as hospital stays,
  operations, prescription drugs and doctor visits, but usually pays little or nothing toward LTC.
• Disability insurance is designed
to replace your income during the working years, and is usually needed to
  pay for basic living expenses.

Myth #7: Consumers know how much LTCI costs, and they think it’s too much.

The realty. Consumers may overestimate the cost of LTCI and are often surprised by how affordable it is.

Myth #8: Long-term care insurance is expensive, and is only for affluent clients.

The reality. LCTI is available at a wide range of premium levels. Options start at around $100 per month for qualified applicants.

Myth #9: People want as much coverage as possible.

The reality. The idea that “something is better than nothing” can be appealing to consumers trying to fit LTCI into a budget, and to those comfortable using multiple approaches to fund long-term care.

When designing long-term care plans, we work to find the very best coverage possible, balancing benefit amount and period, home care coverage, assisted living facility coverage and inflation protection.

Ask me about long-term care insurance options for 2016. Contact Carly Ebenstein@CJB Insurance Services: 510.342.2670.