MEDICAL FINANCE

Richard Martinson, CFP

LTC insurance can help protect your nest egg from the high costs of extended health car.

Though it may not be a popular topic of discussion, the possibility that each of us will need some form of long-term care assistance as we age is really unavoidable.  As a result, instead of shying away from the conversation, it’s important to take the time – in advance – to devise a strategy for dealing with the likelihood of paying for such assistance.  One option can be found in the form of long-term care insurance.

Protect Your Nest Egg
In basic terms, long-term care (LTC) insurance is a type of coverage you can purchase to cover the costs associated with any assistance you receive when you can no longer care for yourself.  If you become physically impaired, due to something such as a chronic illness or a degenerative condition, LTC insurance can help protect your nest egg from the high costs of extended health care.  Like most insurance, you pay a set premium, and in return you receive a fixed dollar amount for care you may receive in various settings – including your home.

LONG-TERM CARE INSURANCE is a type of coverage you can purchase to cover the costs associated with any assistance you receive when you can no longer care for yourself.

If LTC insurance is new to you, one of the first things you may be wondering is how you would qualify to receive the benefits.  Need is based on an evaluation of a group of six different activities you would normally perform, known as activities of daily living.  These include such activities as bathing, dressing, and eating.  In general, a person who is unable to perform at least two of the list of six activities would be considered eligible for LTC benefits.  Additionally, you may also be able to receive benefits if you suffer from certain cognitive impairments, such as Alzheimer’s disease.

Now that you have a better idea of what it is, you may wonder when would be a good time to purchase LTC insurance.  These plans can be an important part of a strategy to protect your retirement assets.  But while it may seem like something that you think would be far off in the future, unfortunately many people end up needing this type of coverage well before they expected.  Generally, as you get closer to retirement age, you’ll want to start seriously considering LTC insurance, and by the time you do retire it should be a part of your investment portfolio.

If you have thought far enough ahead to consider medical expenses later in life, you may be under the assumption that programs such as Medicare or Medicaid will cover a good portion of your expenses.  Unfortunately, when it comes to long-term care, that may not necessarily be the case.  Medicare funding, for example, is limited to medically necessary, acute, skilled care.  This refers to the type of care you would receive at a hospital or skilled nursing facility, and benefits are also typically limited to just 100 days.

On the other hand, LTC insurance benefits cover assistance you may need for performing the simple activities of daily living, as mentioned previously.  This is the kind of care you may receive in a nursing home, an assisted-living facility, or even in your very own home.

Medicaid presents several possible complications as well.  It can cover some long-term care needs, but programs and eligibility vary from state to state.  Medicaid is designed for those individuals who don’t have enough income or assets to pay for long-term care, and would require you to deplete most of your assets in order to qualify.  In addition, it may not cover care you receive in your home, and not all facilities accept it.

Carefully Evaluate
Long-term care insurance may not be the best bet for everyone.  If you have already saved enough money to cover long-term care expenses on your own, then LTC insurance may not be useful.  The same may be true if you don’t have enough assets to protect.  But if you have made plans for the assets you’ve accumulated in your nest egg, you should carefully evaluate whether this specialized insurance coverage could help protect those assets in the future.

Mr. Martinson is a Financial Consultant, CERTIFIED FINANCIAL PLANNERTM professional, Retirement Planning Consultant and Trust Specialist.  He is also a member of the Financial Planning Institute and has over 12 years experience with Wachovia Securities in Merritt Island.  He provides consultations free of charge and can be reached at 321-452-0100.

Related posts:

1. Brevard Physicians Network Helps Docs Focus on Patient Care
2. Fleming, Wheeler Receive Certified Health Insurance Executive Designations
3. High Deductible Health Care is Growing Trend
4. Health Care Reform Roadmap
5. Be Informed To Protect Your Family’s Finances