How to advise clients on long term care options

By Brian Gordon, CLTC®.

According to government statistics, someone who turns 65 today is very likely to need long-term care at some point. Today, a semi-private room in a private care facility can cost as much as $100,000 a year. Home is where most people want to be, especially since the pandemic began, but home health care can also cost well over $100,000 a year.

Even if your clients are saving for retirement, relatively few may have a plan in place to protect their savings from the costs of prolonged illness or degenerative conditions like Parkinson’s or dementia. It’s something a lot of people don’t want to think about, let alone talk about.

But the best way to deal with uncertainty is to plan for it. With a plan, your clients are better able to maintain their wealth, standard of living and independence.

The Long Term Care (LTCI) industry has changed radically over the last few decades. Insurance companies found their premiums weren’t high enough, and because the cancellation rate was much lower than expected, the cost of care was higher. Today there are fewer providers on the market, which means higher premiums.

LTCI is a very complicated subject, but while you may not be able to provide expert guidance, there are ways you can get your customers thinking about this very important topic.

1. Ask them about their long-term care plans.

Many people hope to be able to rely on unpaid family carers, who provide care worth $470 billion a year and keep millions of people away from long-term care facilities. Many family caregivers find the work rewarding because it is an expression of love.

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Even if there is a spouse, child, or other family member willing to help a client with long-term care, it still isn’t “free.” Caregivers sacrifice time and personal savings to care for their loved ones. So ask your clients to think about how they could compensate a family caregiver.

Remind customers that neither Medicare nor most private insurance plans pay for long-term care. That leaves Medicaid, the federally funded and federally administered source of LTC.

2. Advise them to start planning early.

Because long-term care insurance companies are not covered by the Affordable Care Act, they are allowed to base their decisions on pre-existing medical conditions or even family history, such as: B. the presence of early-stage Alzheimer’s. The older someone is, the more difficult it is for them to meet LTCI’s underwriting standards.

So if your client is in their 50s or even 40s, it’s time to consider LTCI when the premiums are more affordable. In addition, even a younger person may experience a debilitating illness or a long convalescence after an accident or surgery.

3. Do your employers offer nursing care insurance?

More and more employers are seeing the benefit of offering LTCI as an option for employees and spouses. Most employees say they would prefer to buy LTCI through their employer rather than from a less experienced long-term care insurance source, such as a health care provider. B. a broker who offers all forms of insurance.

4. Remind them of the tax benefits.

Long-term care insurance premiums are deductible as medical expenses for federal income tax purposes, and benefits are tax-free up to $390 per day beginning in 2022.

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5. LTCI is available in the form of “hybrid” policies.

Many policies today combine life insurance with LTCI. Typically, the life insurance death benefit is tapped first to pay for long-term care; Once the death benefit has been exhausted, the long-term care portion of the policy comes into effect.

Unlike traditional long-term care insurance, hybrid policies offer more flexible benefits, and beneficiaries are reimbursed for partial or unused benefits. Best of all, the premiums are fixed for life and can be paid in one lump sum or over five to 20 years. [MA1]

The right fit depends on the client’s financial goals. If the purpose of life insurance is to leave a benefit to the survivors, it may be better to have a separate LTCI policy.

In conclusion, I would advise clients to consult an LTCI expert before signing on the dotted line. There is a dizzying variety of policies with a wide variety of daily allowances, limitations, waiting periods, types of inflation protection, benefit periods and premiums.

But as complicated as it is, you can help your customers make informed LTCI decisions.

Brian Gordon, CLTC® is President of Gordon Associates Long Term Care Planning, a nationally recognized Chicago area firm specializing in long term care insurance. Contact him at 847.940.8866. He will be happy to work with you or answer your questions.