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Long Term Care Insurance 

With costs approaching and frequently exceeding $70,000 annually, this is an area of concern to all, especially those who have been successful in accumulating significant assets.

Death, taxes and a long-term illness can exhaust accumulated assets. Extensive planning is often done to conserve these assets and protect them from high estate taxes. It is equally important to consider the effect a long-term stay in a nursing home can have on an estate.  To avoid having to "spend down" assets before government programs (Medicaid) will pay for long-term care, a long-term plan may be purchased that will provide the dollars necessary for care. As with most types of health insurance plans, the premium increases as we age and the risk increases.

 “A healthy 55-year-old man can expect to pay $925 annually for $164,000 in current long-term care insurance benefits, according to the 2014 Long-Term Care Insurance Price Index, an annual report from the American Association for Long-Term Care Insurance, an industry group. The Association noted that identical coverage cost 15 percent more in 2013, meaning that the annual premium has actually declined for men.

Leading insurers began charging women higher premiums in 2013.  Coverage equal to that of the man above would cost a 55-year-old single woman $1,225. "Women account for two-thirds of the $6.6 billion in claims paid by insurers last year," said Jesse Slome, the association’s director.

"We advocate a 'Good, Better' Best' approach to long-term care planning for those in their 50s and 60s," explained Slome.  "Good coverage provides $164,000 of available benefits for each spouse.  Better coverage includes an option to add future coverage.  The Best option, also the most costly, includes an automatic inflation growth feature."   

Today's average cost for 'Best' coverage for a 60-year-old couple each purchasing $164,000 of immediate coverage that grows to a combined benefit pool of $730,000 ($365,000 each) at age 85, is $3,840-per-year. "That's a three percent increase from the 2012 average ($3,725) and 4.8 percent higher than 2012 ($3,663)," Slome said.

 However, rates vary significantly from insurer to insurer for virtually identical policy benefits.  
2014 Long Term Care Price Index.pdf

Optional benefits such as home health care are available for an additional premium. As in any estate planning situation, with long-term care the earlier one starts in planning the solution, the lower the cost.

Individuals who have been successful in accumulating an estate should be careful in planning for estate taxes and long term care costs. We would be happy to talk with you about the need, the benefits and the costs as they would apply to your situation. Please give us a call.

Call Will Adamczyk,CFP or email us for a quote from the Top LTC companies. For more info on LTC visit www.will.retirementtime.com


 

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