Throughout the course of your life you will likely purchased numerous different type of insurance – automobile, home, life, and health are among the most common. At some point you may start to consider whether or not you need long-term care insurance. Ultimately, only you can decide if the potential benefits of long-term care insurance are worth the cost; however, when considering your options it helps to have a better understanding of why you might need it as well as what the alternatives are to purchasing long-term care insurance.
As the name implies, long-term care insurance is insurance that is intended to provide benefits to a policyholder who requires long-term care. As you age, the odds of you needing long-term care increase dramatically. By the time you reach retirement age (age 65), you stand a 50-50 chance of needing long-term care prior to your death. At age 85, your odds of needing long-term care increase to three in four. Nationally, the average cost of long-term care is about $90,000 a year with an average length of stay of 2.5 years. Fortunately, the average cost of care in the State of Illinois is slightly below the nationally average at $75,000 a year; however, if you find yourself having to pay out of pocket for that care it could still put a significant dent in your life savings. This is why long-term care insurance sounds like an attractive option; however, premiums for long-term care are costly and polices often do not cover what policyholders thought they would pay.
Long-term care can cost, on average $3-5,000 annually for a policyholder who applies while still relatively young (40-45). For benefits to pay out a policyholder must keep the policy in force until benefits are needed – often 20-30 years. Therefore, the costs of long-term care insurance can be significant over your lifetime. In addition, many policies will not begin paying benefits until a policyholder has paid out of pocket for a specific number of days and then may only pay a set amount per day thereafter.
The alternative to long-term care insurance is often to rely on Medicaid. Unlike Medicare, Medicaid will actually cover expenses related to long-term care. Qualifying for Medicaid, however, can be difficult because of the income and asset limits used when evaluating an applicant. The key to qualifying for Medicaid is to include Medicaid planning strategies in your estate plan early on in your life. Doing so will ensure that your assets are protected and that you meet the eligibility criteria for Medicaid should you need it at some time in the future.
If you have additional questions or concerns about long-term care planning or Medicaid planning contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.