If you have had a parent or grandparent need help as they age, then it’s possible you know about the struggle to pay for care. Getting a caregiver to come to your house to watch dad for a few hours while you’re at work can cost several hundred dollars a week, and assisted living can cost several thousand dollars or more per month. To make matters worse, your parent will be incurring this expense at the exact time of life when it becomes difficult to absorb an additional cost -- that is, when the earning years are over, and that comfortable salary and huge commission have been replaced by a fixed income of social security, (possibly) a pension, and interest or income from savings. Should you cut back on the cost of care? That might not be wise, either. If dad’s got dementia, or mom is a fall risk, then you really do not want to skimp on care, either by leaving them unattended or paying for an inferior level of care.
The fact is, you and I have a 7 in 10 chance of needing some kind of long-term care later in our lives, and we’ll need it precisely at the time we can least afford to add it to our budget. Fortunately, for those who can plan ahead and put away for the future, there is a great way to pay for the care that you are almost certain to need down the road. Long-Term Care Insurance, which you can affordably obtain years before you will need it, can be used to pay for all kinds of care, including in-home care, care in facilities, and much more.
What is Long-Term Care Insurance and how can it help? That’s a question I put to an expert I know in the field. Mike Torres, Licensed Agent for New York Life, specializes in Long-Term Care Insurance and knows quite a bit about its usefulness, its affordability, and the high cost of waiting.
“Long-Term Care Insurance is designed to pay benefits for some of the expenses you may have if you need supervision or assistance with basic activities of daily living, including bathing, eating, dressing, incontinence and others,” said Mike. “Long-Term Care Insurance can pay for care in institutions such as Skilled Nursing Facilities; assisted living provided in Residential Care Facilities; at home for personal care, housekeeping, hospice, and respite care, and in the community for adult day care. There are policies which pay for all of these services, and you’ll want to do some research to find out what kind of items are covered.”
When should you start thinking about a policy? “The important thing is to start with something as soon as you can,” says Mike. “The sooner you start, the more of a head start you’ll get on building the value of your policy, and securing your care for the future. Quite often, you may still be able to increase the value of the policy at a later time, when you find yourself able to afford it.” The other reason to get started sooner is because you have a better chance of qualifying for coverage, and obtaining lower premiums, the earlier you start. “The declination rate goes up as you get older, to a point where you will be unable to qualify at some point.”
What is the right amount? “There’s no one amount that’s right for everyone. Some people can have the care they need with a smaller policy, while others will want something more substantial.” As an example, a 55-year old earning $50,000 can start a policy with a $365,000 lifetime maximum benefit for around 4-5% of their annual income, depending on their health. With the built-in inflation benefits, the lifetime benefit is guaranteed to grow each year. Purchasing a policy sooner allows this inflation benefit to grow much higher at a lower premium, rather than waiting and having to buy the equivalent benefit at a higher rate. By the time the policy holder reaches age 80, this same policy would have a lifetime benefit of over $700,000. This allows the senior much more flexibility in making care decisions without having to worry about skimping on care, raiding his IRA, or worse, forcing his children make undue sacrifices to take care of him.
How does it work when you need benefits? “At New York Life, a Care Coordinator works with you to build a plan of care, which can include home care, respite care, adult day care, care in facilities, and other items as well. The insurance can even cover expenses required to outfit the senior’s home, to remove a fall risk, for instance. In addition, your Care Coordinator will handle the billing and payments. And I can tell you that New York Life is one of the most timely and responsive companies you’ll see.”
OK, you’re convinced you need it, but you’ll probably get around to it in a few years, maybe when you’ve paid off the mortgage, or you’ve done more travelling. That might not be such a great idea, either, according to Mike. “In addition to the increased risk that you will be declined altogether, due to a medical condition, you will find that the cost of waiting can be high. Just waiting five years, from age 55 to 60, you are incurring a $20,000 cost of waiting, paid in the additional costs of your premiums. Waiting ten years, your additional cost is almost $50,000.”
“Put simply, Long-Term Care Insurance is a solution to a money problem that you are likely to have eventually. It really should be part of everyone’s financial plan.”
Mike is a great resource for anyone interested in learning more about Long-Term Care Insurance. He works out of Brea, CA, and you can reach him at his office at (714) 255-5140, or by email at [email protected].
If you or a loved one is in need of help with chores around the house, transportation to appointments or with personal care, contact Synergy HomeCare of North Orange County. SYNERGY HomeCare services Brea, Yorba Linda, Tustin, Anaheim Hills, Fullerton, Orange, Placentia and most cities in North Orange County. Contact Synergy HomeCare of North Orange County today for a free, no-obligation visit to your home to assess your personal care needs. We provide quality, compassionate care, with no contracts, and no minimums.