Category Archives: Long Term Care Insurance Costs

Long Term Care Costs – What You Need to Know

Long term care costs can vary based on your location, where you receive care, and the level of care you need. Learn more about what you need to know about long term care costs below.

Cost of Care Varies by State

The cost of care varies based on your state of residence or the state you plan to receive care. For example, the annual cost for home care in Alaska is $60,000 (according to 2015 statistics). In comparison, a year of home care in Texas costs $45,000.

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New Types of Long Term Care Insurance: Hybrids & Short Term Care

An experienced LTC specialist would tell you that long term care insurance isn’t for everyone. Sure, everyone needs to go through long term care planning, but other options may be more suitable for different individuals or families.

Enter: Hybrid products or short term care insurance as a solution. These products joined the market in recent years to offer a similar but different solution than traditional long term care insurance. With these additional options available, you’re not limited to a “one-size fits all” approach to long term care planning.

Learn more about these two alternative options to discover if one may be better for you.

Hybrid Products

What is it?

A hybrid product packages life insurance or an annuity with long term care coverage. This option allows heirs of policy owners who die to receive a partial refund of premiums if the policy owner didn’t use their LTC coverage.  They also bring guarantees to never have a premium increase.

Why should I consider it?

Hybrids may be a great solution for higher net worth individuals concerned with long term care planning. They often require a single, upfront premium ranging from a minimum $50,000 to $130,000 or more for average users.

Hybrids may also be a great choice for individuals with appreciated annuities or life insurance. In this case, they may transfer money from these policies tax-free to a hybrid through a 1035 exchange.

Is there a trade-off?

Yes. With hybrid products, your heirs receive a death benefit, but this option often provides less long term care assistance than a traditional policy. This may satisfy the burning question of, “Will I use it?” But it may not cover all your care needs.

Short Term Care Insurance

What is it?

Short term care insurance offers a shorter benefits duration (typically 12 months or less) and often provides a smaller daily benefit to offset the cost of care. These policies may be as small as $50 per day for three months.

Why should I consider it?

Traditional long term care insurance can be expensive leaving some families feeling like they have few options to plan for their future. Short term care offers an affordable solution to ensure a portion of your care needs are covered. It gives the family time to prepare financially in case care is needed for a longer period of time.  At the same time, you’re saving money by paying a lower annual rate each year.

Is there a trade-off?

Yes. Short term care policies generally last for 12 months or less and some individuals may need care for a few years. A lower daily allowance may not cover all of your needs if you require extra assistance from a home health aide, assisted living facility, or nursing home care. However, if traditional long term care insurance is too expensive, it’s better to have some coverage than none at all.

To recap, there’s no “one-size fits all” answer to planning for long term care. It’s important to consider your options and choose the plan that works best for you and your financial needs. Don’t navigate these waters alone. Speak with a long term care specialist who can assist you in researching your options.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

Trade-Offs to Make Long Term Care More Affordable

There are a lot of aspects that affect the cost of a long term care insurance (LTCI) plan. Along with what features you actually apply for, your age, current health, relationship status, gender, and geographical location can all have an impact on the cost of LTCI.  We came up with a list of trade-offs to make long term care more affordable, strictly based on what benefits you apply for.

We have already determined that the “average” cost of LTCI can vary greatly, but for someone in their 50s the costs average between $100 and $180 per month.  This would typically be a policy with benefits around $4,500 per month, a 3 year duration and 3% compounding inflation.  Let’s take that “average” policy and adjust it a bit with some trade offs to make the price more affordable.

Short and Rich

One option would be to decrease your benefit duration from 3 years to 1-2 years, increase your monthly benefits to $7500 and select a future purchase option for your inflation.  Depending on the carrier, this would allow a smaller premium, but would still be a great option for coverage.

The Opposite of Short and Rich

Another option to reduce costs would be to increase your benefit duration from 3 years to 5 years, decrease your monthly benefits to $100 a month and keep your 3% compound.  While this policy may not be as rich, this could fulfill a “some is better than none” situation for people who just want a little extra help with costs.

There are other ways to save money on long term care insurance besides adjusting your benefits, as we have discussed in other posts.  Make sure to also compare companies, apply with a spouse or partner (if eligible), and apply while you’re healthy.  We also encourage you to play around with different benefits as we have outlined here using our Instant Quote Tool.  It is easy to use, there is no obligation, and it shops the top carriers in the industry.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

What is the average cost of long term care insurance?

Many people want to know what the average cost is for long term care insurance?  It is a fair question, as outside of LTCConsumer.com there isn’t much consumer friendly resources for someone to get educated without having to talk with a sales agent.

Averages can be very misleading.  For example, the average height of two men if one is 7 feet and another is 5 feet, is 6 feet tall.  But both are on the extremes.  So, what is the “average” cost for long term care insurance?  For a person in their 50s the cost averages between $100 and $180 per month.

What benefits does the average person buy:

  1. $4,500 per month of benefits.
    • Why?  70% of all claims today will start in the home.  The average cost of home care nationally is $4,500 per month.
  2. 3 year benefit period.
    • Why?  The latest claims study done earlier this year revealed the average claim for men is 2.4 years and the average claim for women is 3 years.
  3. 3% Compounding inflation
    • Why?  The average inflation rate over the past 10 years for home care has been 1.5% and for facilities has been 3%.

While this is the “average” policy it is not to say this is what is best for you.  For example, maybe you have some extra money or home equity available should you need care so you only need a 1-2 year benefit period.  Or you have a family history of Alzheimer’s’ and know that a claim can last much longer than 3 years, in which case you might want a longer, richer plan.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

Making Long Term Care Insurance Affordable

Everyone likes to save money, just ask Geico and their famous gecko who preaches, “Save 15% or more on car insurance.”  Many people get scared off or disinterested in long term care insurance because of the fear that it is too expensive.  If your interested in making long term care insurance affordable, you are in luck and should continue reading.

Buy while you’re young: Long term care insurance may be paid for with your money, but it is purchased with your health.  You must be healthy enough to qualify for long term care insurance so it is wise to look into the matter while you are still young and before certain health issues arise.  The younger you are when you buy the insurance, the cheaper it will be.

Do your research: One size does not fit all when it comes to long term care insurance.  Like other lines of insurance (health, life, disability), there are a variety of plans to choose from, each fulfilling a different need.  The plan you pick could vary drastically depending on your life goals and needs.  In this case, it pays to do your research and speak to someone who specializes in long term care planning.

Apply with a spouse or partner: You could save up to 30% or more by applying with a spouse or partner.  You also have the option to apply for what is called Shared Care, which gives you access to your spouses benefits should the need arise.

Adjust your benefits: As mentioned above, your plan and benefits can vary greatly depending on your needs and what you are trying to protect.  One way to keep a solid plan but save some money is to buy a policy with a higher monthly benefit but a shorter duration.  This means you would get more money per month to help pay for care, but for a little less time.  Any excess money each month would roll over, potentially increasing the amount of time for your claim.

Long term care insurance doesn’t have to be expensive.  When it comes to a long term care plan, some is better than none.  No one ever sent money back to the carrier because it just wasn’t enough to cover the full cost of their care event.  When you are in a long term care crisis, every little bit of extra money helps.

We recommend speaking to a specialist today to talk about your long term care plan.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

How to Save Money on Long Term Care Insurance

Updated: 8/18/17

Everyone likes to save money, whether on groceries, clothes, a car, a house, and even insurance.

In previous blog posts, we shared that long term care insurance is paid for with your money, but it is bought with your health. However, there has to be more ways to save on long term care insurance than just being healthy, right?

Here we compiled a list on how to save money when applying for long term care insurance:

  1. Compare companies:Prices can vary by up to 30% for the same plan from different insurance carriers. Each carrier has different guidelines for which health issues they may or may not accept. They also may vary their prices based your marital status.
  2. Apply with a spouse or partner:There can be significant discounts when applying with your spouse or partner. With some of the carriers we represent, you could save 20-40% on your policy if you apply with your spouse, as opposed to 0-15% if you are married and apply alone.
  3. Apply while you are healthy: You could save 5-10% on your premiums by getting a good health discount.
  4. Adjust your benefits:One of the biggest factors that determine the price of your policy is, of course, the benefits you apply for. Two big factors that will move the needle on price the most are your deductibleand the duration. Check out our Buying Trends Guide to see what many people are applying for.

With all of these options, we recommend working with someone who specializes in long term care planning so you can find the best deal for your unique needs. Our team of specialists are some of the best planners in the U.S. and help thousands of people each year with their long term care planning.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

 

Save on Long Term Care Using Your Health Spending Account (HSA)

According to the Department of Health and Human Services, 70% of people who reach age 65 will need some form of long term care in their lifetime.  It is a scary fact, but what may be scarier is finding ways to pay for your long term care insurance.  You may be interested to learn how to save on long term care using your health spending account (HSA).

For those who may struggle to fit paying for long term care insurance into their budget, the good news is you may pay for premiums with your HSA.  It must be a ‘tax-qualified’ policy (which most are) and the amount you can withdraw tax-free for these premiums depends on your age.

In 2015, you can use up to $380 tax-free from your HSA for long term care insurance premiums if you’re 40 or younger, $710 if you’re 41 to 50, $1,430 if you’re 51 to 60, $3,800 if you’re 61 to 70 and $4,750 if you’re over 70.  This amount increases each year to account for inflation growth.

If you chose not to use your HSA money to pay for a portion of your premiums, you may also be able to count those premiums as tax-deductible medical expenses.  You would need to follow the guidelines outlined in our 2015 Tax Guide.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

Cost of Long Term Care Calculator

If you’ve ever searched for a cost of long term care calculator, you may have come up short.  That is until today!  We recognized the lack of independent, unbiased resources on long term care planning, so we created the Instant Cost Calculator.

Because the cost of long term care insurance varies based on many different factors, it can be difficult to know what your exact cost will be without speaking to a specialist about your specific situation; however, the Cost of Long Term Care Calculator is a great starting point for a ballpark figure.

The Cost of Long Term Care Calculator lets you get educated on your own terms.  You can compare multiple long term care insurance (LTCI) carriers, with multiple benefit options, without giving your personal information first.  You just need to provide state of residence (plans vary by state), gender (LTCI carriers’ gender base pricing), marital status (you may be eligible for discounts) and age, then you are free to play with any combination of benefits you are interested in.  If at any time during the process questions arise, our team of Consumer Specialists are available to help.

We recently added a new feature to the Instant Quote Calculator that has it default to the most commonly applied for plan design. We have seen that most people apply for long term care insurance with a $150 a day benefit amount, 3 year benefit period and 3% compounding inflation.  But just because that’s the most common, doesn’t mean you can’t check out other features and plans.  Run a quote today to see the cost of long term care insurance from a variety of carriers.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.

Why do Single Women Need a Different Long Term Care Insurance Plan?

Science recently made a profound discovery: women and men are different!  Women are not only physically different, but in general think and speak very different than their male counterparts. Add to that a 2014 study from the US Bureau of Labor Statistics that found for the first time, the majority of the adult population in the United States identifies as single.  In contrast, only 37.4 percent of the population identified as single in 1976.

How does being a single woman affect your plans if you have an extended healthcare event and why do single women need a different long term care insurance plan?  The life expectancy for women is 5 years longer than for men and by age 65, 1 in 3 women will live to age 90 or more!  When you consider the average cost of home healthcare is more than $50,000 per year today, living longer and requiring care can add up quickly.

When considering long term care insurance, single women will need more comprehensive coverage.  We recommend having a monthly benefit of $4,000 or more and a benefit period of 2 years or more.  This will provide a solid base to pay for home healthcare, which is most common.  The other option to strongly consider is an inflation benefit that will grow the policy over time to keep up with the rising cost of care.  We recommend an inflation rate of 2-3%.

What is most important is that women have a plan of help in place before a long term care event occurs.  That plan should include who will help if care is needed?  Is that a friend, relative or professional?  How will that care be paid for and where will care be provided?  Making sure these questions are answered and talked about with those affected is critical, regardless if insurance is the right choice.

Having a plan in place allows single women to have the peace of mind that they will be cared for in case the need arises.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.