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Long Term Care
Feb 28, 2024
An often-overlooked type of insurance is long-term care insurance. With a growing elderly population, there is an increasing need to cover the costs of aging.
Many people think their long-term care costs will be covered by health insurance. This is not generally the case. Private healthcare insurance does not usually cover a person if a chronic illness turns into a need for nursing home care.
Medicare is also not a great option, as it really only pays for short term care. You must have a medically necessary inpatient hospital stay of three consecutive days to qualify. Within 30 days of that stay, the patient needs to enter a skilled nursing facility. Medicare will pay for the first 20 days of a skilled nursing facility at 100%. Then, Medicare covers the cost with a daily coinsurance paid by the patient up to 100 days. After 100 days, the patient is responsible for the full cost of services and Medicare pays nothing.
There are a few methods for handling the cost of long-term care. You can choose to use your savings and handle all expenses with your own assets, you can use Medicaid, or you can use Long Term Care Insurance.
Paying for care out of your personal resources can be very expensive and comes with the risk that you will outlive your available assets. Medicaid will pay for long term care, but there is an income maximum, asset level maximum, and the patient must require a nursing home level of care. One of the best ways to cover long term care for a person with significant assets is long-term care insurance.
There are a few different types of long-term care insurance: traditional, hybrid, and rider. A traditional policy is a standalone policy that only covers long-term care. This is an older type of policy where you typically pay an annual premium for life. The hybrid policy combines a policy for long-term care expenses with a life insurance benefit. If you don’t use this policy during life for long-term care expenses, it will pass to your beneficiaries as a death benefit. Finally, a long-term care rider is added to a life insurance policy so that a percentage of your death benefit can be used for those care expenses, if needed.
While most policies start paying benefits when a patient needs help with two or more activities of daily living (bathing, dressing, toileting, caring for incontinence, transferring/walking, and eating), the cost of long-term care policies depends on a number of factors:
- Age: Usually the younger you are and the less health problems you have, the less you’ll pay when you get a policy.
- Gender: Because women usually live longer, their policies generally cost more.
- Marital Status: Premiums are generally lower for married people.
- Amount of coverage: The more coverage and benefits in the policy, the higher the cost.
There are many different reasons for choosing a long-term care policy. They help people afford a higher quality facility or make long-term care services more affordable, they protect assets for beneficiaries, they provide piece of mind when thinking about the future, and they give people options other than nursing home care if it is needed. Ask your advisor about your long-term care insurance options here at Bison Wealth, where we help you plan, protect, and prosper.
Disclosures | Important Information
DISCLOSURES
IMPORTANT INFORMATION
Investment Advisory services are provided through Bison Wealth, LLC located at 3550 Lenox Rd NE, Ste 2550 Atlanta, GA 30326 or Bison Advisors, LLC located at 140 Cateechee Trail, Hartwell, GA 30643. Securities offered through Metric Financial, LLC. located at 725 Ponce de Leon Ave. NE Atlanta, GA 30306, member FINRA/SIPC. Bison Wealth, LLC and Metric Financial, LLC are not affiliate entities. More information about Bison Wealth or Bison Advisors and its fees can be found in their respective Form ADV Part 2, which is available upon request by calling 404-841-2224. Bison Wealth and Bison Advisors are independent investment advisers registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training.
The statements contained herein are based upon the opinions of Bison Wealth, LLC (“Bison”) and the data available at the time of publication and are subject to change at any time without notice. This communication does not constitute investment advice and is for informational purposes only, is not intended to meet the objectives or suitability requirements of any specific individual or account, and does not provide a guarantee that the investment objective of any model will be met. An investor should assess his/her own investment needs based on his/her own financial circumstances and investment objectives. Neither the information nor any opinions expressed herein should be construed as a solicitation or a recommendation by Bison or its affiliates to buy or sell any securities or investments or hire any specific manager. Bison prepared this Update utilizing information from a variety of sources that it believes to be reliable. It is important to remember that there are risks inherent in any investment and that there is no assurance that any investment, asset class, style or index will provide positive performance over time. Diversification and strategic asset allocation do not guarantee a profit or protect against a loss in a declining markets. Past performance is not a guarantee of future results. All investments are subject to risk, including the loss of principal.
Index definitions: “U.S. Large Cap” represented by the S&P 500 Index. “U.S. Small Cap” represented by the S&P 600 Index. “International” represented by the MSCI Europe, Australasia, Far East (EAFE) Net Return Index. “Emerging” represented by the MSCI Emerging Markets Net Return Index. “U.S. Aggregate” represented by the Bloomberg U.S. Aggregate Bond Index. “Treasuries” represented by the Bloomberg U.S. Treasury Bond Index. “Short Term Bond” represented by the Bloomberg 1-5 year gov/credit Index. “U.S. High Yield” represented by the Bloomberg U.S. Corporate High Yield Index. “Real Estate” represented by the Dow Jones REIT Index. “Gold” represented by the LBMA Gold Price Index. “Bitcoin” represented by the Bitcoin Galaxy Index
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