By Mitch Adel
Long-term care insurance is one option to help pay for the costs associated with caring for individuals who need help with the activities of daily living such as bathing, eating and using the bathroom. Most long-term care insurance policies today pay for care at home, in assisted living or in a nursing home. Planning to cover this type of care is a critically important piece of the estate planning puzzle for many families and individuals due to the rising costs for care. Unfortunately, costs are increasing substantially for insurance companies as well, leaving seniors with a shifting landscape as they attempt to obtain long-term care insurance for themselves.
A recent article by Jane Gross in the New York Times outlined some of the most significant developments in. long term care insurance. Gross points out that rising costs have prompted some national insurers to conclude that the current long-term care insurance model is unsustainable and many have chosen to stop writing new policies altogether. Those that still offer long-term care products are working to “raise premiums, tighten eligibility requirements and reduce key benefits.”
Perhaps most significant development of all is that insurers are raising rates for women. Beginning in April, many insurers are hiking rates as much as 40% above the equivalent costs for men. With $2 out of every $3 paid out by these policies going to women, and considering that seven out of ten nursing home residents are female, insurance companies are making a strategic shift in their pricing strategies.
What does this mean for you and your family? In addition to the higher premiums and leaner benefits, insurers are already demanding stricter and more comprehensive underwriting policies and procedures, including more invasive medical tests, such as blood tests, and a stricter review of your medical history. While phone interviews were sufficient in the past, in-person meetings and interviews are now becoming standard procedure.
These changes make it even more critical to review your plan with your team of legal and financial advisors and ensure that assets are protected from potential long-term care costs. Many people are unaware that Medicare covers virtually no long-term care expenses, leaving the uninsured vulnerable to the stratospheric costs of care at home or in a facility. But with the landscape shifting beneath your feet, the time is now to explore your options and get prepared.
From a cost-benefit standpoint, purchasing long-term insurance still makes sense for those who are healthy now and those who can afford to pay the premiums.There is a real incentive to act sooner rather than later because the price of long-term care insurance goes up dramatically as you age. As a matter of fact, waiting can cost you thousands of dollars more… or worse, you may not be able to qualify if your health changes.
If you already own a long-term care policy, you may be in a good place, but understand that many seniors, particularly women, will almost certainly need to find alternatives as their premiums for long-term care insurance will likely increase. Further, if you have a health conditions such as diabetes, mobility problems or Parkinson’s, it can mean that you are unable to purchase long-term care insurance at any price.
What is a good course of action that you should consider right now? Work with an elder law attorney who can make you aware of options to plan and pay for care at home or in a facility.These may include planning in advance to qualify for public benefits and/or veteran’s benefits in addition to potentially purchasing long-term care insurance.
When it comes to your health and wellbeing, it pays—literally— to think long term.