Long term care insurance and the silver tsunami
By Barbara Hanson
Barbara Hanson & Associates
People who purchase LTC insurance at the earliest age possible will enjoy better benefits at lower premiums, and pay the least in the long run. A long term care insurance specialist can help you determine if this protection is appropriate and affordable without changing your lifestyle now or in retirement.
Seventy-seven million baby boomers are beginning to turn 65 this year, and the government is hoping that they are prepared to pay for their own care if they become disabled by illness and aging.
Of those over 65, 43 percent have historically spent time in a nursing home before dying. About 95 percent of nursing home residents only require custodial care, not 24-hour medically necessary care, which is a limited benefit payable by Medicare. Boomers typically have had fewer children than their parents, they live longer and many are single.
Care can cost $80,000 or more a year and will probably continue to increase at least 5 percent per year. Medicare was designed for acute health problems and Medicaid for the indigent.
A health insurance product has existed now for over 41 years to help pay for long term care. Originally, LTC insurance only paid for nursing homes, since families were the main source of help when a parent outlived their health. Baby boomers have had fewer children and may have difficulty living with a son or daughter who also has a job and kids in the home.
Long term care insurance has evolved to include the help and equipment necessary to cover the needs of a disabled person and to help the family caregivers with the support needed to maintain their own health and sanity.
The Journal of the American Medical Association (12/15/1999) found that older care-giving spouses face a 63 percent higher risk of mortality than a non-care-giving control group. We all think we could care for each other because it is difficult to imagine being ill, but more than half of us will need home health care after age 65 — that means the other half will be providing care.
Rep. Nancy Johnson, a Republican from Connecticut and chairman of the Ways and Means Health Subcommittee, introduced the Long Term Care and Retirement Security Act in 2001, which offered an improved tax deduction for purchase of long term care insurance policies for the general public. Some form of this legislation has been offered annually since then, but with current fiscal concerns, so far, not approved.
Currently, LTC insurance is 100 percent tax deductible as health insurance for corporations to buy for selected members, deductible within limits for the self-employed, and for the rest of us if we exceed 7.5 percent of our income on health. The bipartisan bill proposed was to give equal tax benefits to all of us to buy LTC insurance on a tax deductible basis. (2011 — still not passed 100 percent for all.)
According to Johnson, "Long term care coverage will give people comfort that their needs will be met if they need this care, and will lift some of the financial burden from future generations. Private insurance also allows people the freedom to choose the setting for their own care — whether this is a nursing home, rest home, at home or an assisted living facility — without threatening their family's financial security. Moreover, this would also make it more likely that the Medicaid safety net will be there for those truly in financial need." (7/16/01 Hill)
People who purchase LTC insurance at the earliest age possible will enjoy better benefits at lower premiums, and pay the least in the long run. Waiting can mean a health change that makes a person ineligible for the better companies that underwrite tightly and have maintained premium stability.
Good policies will include immediate care coordination so a person has help finding the care they prefer in the setting of their choice. A long term care insurance specialist can help you determine if this protection is appropriate and affordable without changing your lifestyle now or in retirement. The AALTCI
This insurance will become common due to the aging of America and the necessity for personal planning, saving and insuring for quality care. Government custodial care funding will most likely be impossible in the face of the sheer magnitude of 1 in 4 Americans being over 65 and 1 in 2 of those 85+ with dementia.