By MICHAEL L. WINTER & LINDSAY A. YOUNGBAUER
Michael Winter and Lindsay Youngbauer, from Diversified Trust, a comprehensive wealth management firm with an office in Nashville, explain the importance of healthcare professionals considering long-term care (LTC) insurance as a key aspect of wellness and financial planning for themselves and their patients.
Those in the healthcare industry often think first about the health and wellbeing of others – whether it’s a clinician treating a patient, an innovator creating a new technology, or an executive working to improve access to care – and may neglect considering their own health and wellbeing. While most individuals are aware of life insurance, fewer are aware of long-term care (LTC) insurance, but that lack of cognizance of the importance of LTC insurance can be financially detrimental to individuals and their loved ones. LTC insurance – which pays for services such as bathing, dressing and eating for those enduring chronic conditions or following a disabling accident or illness – can be one of the most valuable considerations in wellness and financial planning, benefiting both individuals and their families.
The Truth about Long-Term Care Insurance
LTC insurance picks up where health insurance, disability and Medicare leave off. Care can be provided in the home, assisted living facilities, memory loss units, nursing homes and adult day cares. A LTC insurance policy pays for care when an individual has a severe cognitive impairment — such as Alzheimer’s disease and other forms of dementia — or is unable to perform two of these six activities of daily living without assistance or supervision: continence, dressing, toileting, feeding, bathing, and transference.
In 2014, 7.2 million LTC policies were in effect. Having LTC insurance brings the peace of mind of knowing that care will be provided without depleting your worth or burdening your family. Although most policies have benefit caps and may not pay for all the care you need, LTC insurance can be an invaluable cushion against the high cost of care.
Tackling the Myths
Despite its benefits, there is some misinformation circulating about LTC insurance. Below are some of the myths on this topic.
MYTH #1: I’ll never need long-term care.
Reality: One in two people will need LTC, including 70 percent of those over 65. Most individuals have a friend or family member who either required LTC or provided care for a loved one. Perhaps they even know someone who lost their life savings paying for LTC; yet many are in denial of its necessity.
MYTH #2: Long-term care is something to consider in one’s 60’s.
Reality: Forty percent of those in need of LTC are age 18-64. The costs for LTC insurance also rise with age, so considering LTC insurance at a younger age has a financial incentive.
MYTH #3: Long-term care is covered by traditional health insurance, disability, Medicare or Medicaid.
Reality: Health insurance pays for medical expenses such as hospital bills, doctor’s visits and prescriptions. Disability insurance pays a portion of one’s salary if he/she becomes disabled and unable to work. Medicare only covers skilled care for periods up to 90 days with certain requirements. A 2014 Genworth Cost of Care Survey found that the national median cost for a home health aid is $45,188 per year, and it increases to $87,600 for full-time nursing home care, highlighting the cost of LTC.
MYTH #4: I can count on my family to take care of me.
Reality: This is an unrealistic assumption. Providing LTC can take a significant emotional, physical and financial toll on caregivers. As much as they want to help, they would have to put their lives on hold to provide care, which can lead to resentment and family disagreements over care responsibility.
MYTH #5: I can pay for long-term care myself.
Reality: This is untrue for most Americans. Regardless of income status, paying for care may impact financial commitments like funding education, philanthropy or living comfortably in retirement. Because Diversified Trust does not sell LTC, we can be a valuable and objective resource in helping clients consider LTC insurance as part of their overall financial plan.
Consider Long-Term Care Insurance as a Part of Your Health and Wellness Planning
Based on the information above, we believe everyone – including healthcare professionals – should at least consider LTC insurance. The need for LTC is a real possibility especially as we live longer. A LTC policy can provide significant benefits to help you achieve your financial and wellness goals, in addition to peace of mind knowing that you won’t be placing an undue burden on your family.