Long-Term Care Insurance
Welcome to Part 4 in our long-term care series. In week 1, we learned what long-term care encompasses and who might need it. In the second installment we learned that for the most part, Medicare does not pay for long-term care. In part 3, we learned about Medicaid and how to qualify. This week, we look at long-term care insurance.
Long-term care insurance
In New York, long-term care insurance may be purchased by an individual or some employers or associations offer policies to employees or members. It may be purchased via a private insurance company, or, previously, as part of the New York State Partnership for Long-Term Care (NYSPLTC), which combines private insurance with Medicaid Extended Coverage. The purpose of NYSPLTC was to help New Yorkers financially prepare for the possibility of needing nursing home care, home care, or assisted living services someday. Unfortunately, no NYS Partnership insurance policies are currently being offered, nor have they been for the past few years, so make sure to keep your NYS Partnership policy active if you are lucky enough to have one!
Is long-term care insurance expensive?
Yes, but is usually worth the investment if an individual can afford it. Care must be used in selecting a policy because not all policies cover all expenses. Additionally, it’s important to apply for long-term care insurance while an individual is still healthy and young enough to qualify. A recent survey found that 30% of 60-64 year olds who applied for long-term care insurance were rejected, likely because they already had health issues. Applying while one is still healthy is critical.
I have a traditional LTC policy that is 20 years old. What should I do?
Keep paying your premiums! If you own a traditional long-term care insurance policy purchased years ago when the costs were still affordable, do not drop your policy! Even though premiums are rising, it is usually recommended that you hold on to your long-term care insurance policy. Unless you are extremely affluent, privately paying for care can be daunting and seeing one’s nest egg dissipate can be heart-wrenching. It is very important to remember to update your address if you move so that you are notified that a policy payment is due (long-term care insurance companies would like nothing better than to drop a long-time participant that they didn’t have to pay out on for failure to pay premiums). Also, long-term care insurance companies allow the insured to indicate a second person (such as a child) to notify if premium payments are not made on time. It’s important to designate a back up person who will get notice if the policy is about to lapse. Do not let your policy lapse!
Long-term care insurance with death benefits
In New York, you can find long-term care insurance policies that provide a death benefit to your survivors. Hybrid life/LTC insurance policies combine life insurance with long-term care coverage. If you need long-term care, the policy will pay for those expenses, potentially reducing the death benefit. If you do not need long-term care, the full death benefit is paid to your beneficiaries.
The bottom line
Planning for an unclear future is challenging under any circumstances, but planning is essential. With proper planning you can preserve the assets you spent a lifetime building, as well as ensuring you will have the care you may require. In our next installment on long-term care we will look at some commonly asked questions.
The information provided herein does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available here are for general informational purposes only.
