 Personal Finance PowerPoint Presentation Long Term Care LTC Insurance Overview Prepare to Get Financially Faked by Practicing Personal Finance Insurance is part of our long term risk mitigation strategy where we put a formal process in place, something like setting the insurance goals, developing a plan, putting the plan in action, reviewing the results and repeating the process periodically. Those to this information can be found at Investopedia Long Term Care LTC Insurance, which you can find online. Take a look at the references, resources, continue your research from there. This is by Julia Kagan, updated September 15th, 2021. In prior presentations, we talked about different types of insurance. Then we went to the medical insurance, which has some more complexity due to laws and regulations and the complexity of the medical field. Then we moved on to dental and vision, which have some components of the medical insurance but a bit of a different perspective than possibly traditional types of insurance. Now we're looking at the long term care. Just to get some perspective, it's useful to look at traditional kinds of insurance first. For example, if we think about the property insurance, life insurance, if we think about the liability insurance, these are classical kinds of insurance that we're usually insuring against something that we're hoping doesn't happen in the future, but if it were to happen, would be financially devastating. Therefore, we insure for it, such as premature death, being sued for millions of dollars, having our home burned down. We're hoping that doesn't happen. But if it does, it would be so significant of something that we're going to have to insure against it, insuring against that risk. If we look at the medical insurance, we have a similar kind of thing because we could come down with a disease which would be financially devastating. So we can insure against that, but it's also been kind of expanded to cover other routine type of stuff as well where we're using in essence the insurance to help us make more affordable the routine kind of costs and maintenance and preventative type of stuff. We talked about dental insurance and vision insurance, which tends to be less to cover that big event, although it could be used to mitigate risk a bit, but also it's being used, for example, to help to lower the cost of the routine kind of stuff that we expect to be happening at some point in our lives, typically more so for some than others, depending on our particular needs, but we're going to have the normal routine maintenance as opposed to our home burning down, which we're hoping that never really happens, although we're still most likely going to insure against it. So now we're looking at the long-term care insurance, so we want to keep those perspectives in our mind as we go through it. So what is long-term care LTC insurance? Long-term care LTC insurance is coverage that provides nursing home care, home health care, and personal or adult daycare for individuals age 65 or older or with a chronic or disabling condition that needs constant support. So as you can imagine, if you're dealing with someone that or if you yourself or someone you're dealing with at some point needs constant support through the entire day, that could be quite costly. So LTC insurance offers more flexibility and options than many public assistance programs such as Medicaid. So we talked a little bit about Medicaid in the past, but Medicaid is kind of gets in there for people that have or below an income threshold, so typically there's some kind of requirements to qualify for the Medicaid. And it's not good. We don't like to be in a situation where we basically have to lower the amount of assets we have or something like that to be able to qualify for Medicaid. It would be nicer if we had some other options in the event that we needed that long-term care. So possibly long-term care insurance may be an option. So many people are unable to rely on children or family members for support and by long-term care insurance to help cover out-of-pocket expenses. Otherwise, long-term care expenses would quickly deplete the savings of an individual and or their family. So clearly if you're spending out-of-pocket for someone that needs constant care all day long, then that's going to deplete the funds quite quickly even if you have a decent savings if you've been doing decent well on the savings. While the cost of long-term care differ by region, it is usually very expensive. In 2020, for example, the average cost of a private room in a skilled nursing facility or nursing home was $105,850 a year according to a report on long-term care by Genworth, a home health aid cost on average $54,912 annually. In the United States, Medicaid provides low-income individuals or those who spend down savings and investments because of care and exhaust their assets. So in other words, you've got Medicaid as kind of like the bar to help people out because obviously we don't want to have people that can't don't have any option. So you've got that benefit, the government benefit there, but there's requirements in terms of asset levels and income level. So if you're above that level and you don't have any other options, then at some point you might have to deplete your assets to some degree or do something in order to qualify for the Medicaid, which isn't a situation you would like to be in typically. So each state has its own guidelines and eligibility requirements. In most states, you can keep up to $2,000 and as an individual and $3,000 for a married couple outside of your countable assets, which include checking and savings account balances, CDs, stocks and bonds. So your home, car, personal belongings or savings for funeral expenses don't count as assets. Tips for retiring without long-term care insurance. Long-term care insurance usually covers all or part of assisted living facilities and in-home care. Medicaid rarely does. Full home care coverage is an option with long-term care insurance. It will cover expenses for a visiting or live-in caregiver, companion, housekeeper, therapist or private duty nurse up to seven days a week, 24 hours per day, up to the policy benefit maximum. Special considerations. Many experts suggest shopping for long-term care insurance between the ages of 45 and 55 as part of an overall retirement plan to protect assets from the high costs and burdens of extended health care. Long-term care insurance is also cheaper if you buy it younger. So clearly just like any other kind of insurance, if you try to buy the insurance right when you have the problem, clearly the insurance is going to be more expensive. As you get older, it's more likely that you're going to be needing the long-term care so you would expect then the insurance that you would be purchasing would be more expensive at that point. If you buy it at a younger point in time, then it's likely that because you're paying for it for a longer period of time that you could lock in possibly the lower premiums. So in 2020, the average annual premium for a couple with 55 years old was $3,050 according to the American Association for Long-term Care Insurance. Long-term care insurance premiums can be tax deductible if the policy is tax-qualified and the policy holder itemizes tax deductions among other factors. Usually companies that pay long-term care premiums for an employee can deduct them as a business expense. Due to the high cost of this product, a number of alternative ways of paying for health needs in later years have come on the market. They include critical illness insurance and annuities with long-term care riders. Think through what would make the most sense for you and your family, especially if you're a couple with a significant age or health difference that could affect your lives going forward. So if you've got, you know, obviously differences in ages, then it's more likely possibly that one is going to need more coverage at some point in time. So if you don't have a financial advisor, this could be a reason to hire one who specializes in elder care issues to work through these issues with you. If you can't bear to face them, it makes sense to do your best to shape your own future instead of leaving it to family members in the flurry of a health emergency. So obviously if you can, you know, make your own decisions at the point in time that you're able to make your own decisions, that can make it easier than on possibly family members who, you know, obviously have probably haven't been thinking so much about the long-term care possibly at that point in time since it's not something that they're concerned with directly in their lives. So it might not be something that they're actually, of course, planning towards. So those are some options here. You could take a look at that. Investopedia, continue your research, take a look at the references from there.