Introduction
As your parents age, conversations about health care and financial planning become more important—and more complex. One critical area to consider is long-term care insurance (LTCI). With people living longer than ever, the chances of needing some form of long-term care—such as nursing homes, home care, or assisted living—are growing. If your parents aren’t financially prepared for these costs, it could quickly drain their assets or impact your own finances. Understanding whether LTCI is the right option can help you support their independence, protect their savings, and prepare for the road ahead.
Long-term care: the odds against it aren’t long at all
Maybe you think that you’ll be the lucky one, that your parents won’t need long-term care, but the statistics indicate that we’re living longer and the need for long-term care is more likely. Also, parents living alone (especially women, who have a longer life expectancy then men), are more likely to need long-term care without a spouse or partner available to help out.
The cost of long-term care isn’t low, either
Long-term care can also be expensive. What’s more, Medicare, Medigap, managed-care programs like health maintenance organizations, and indemnity medical insurance plans don’t pay for long-term nursing home care or for assisted living. Although Medicaid, a state-administered federal welfare program, will cover the costs of long-term care, your parents must be legitimately impoverished to be eligible for it.
If they’re not prepared, your parents might find their lifetime savings and their assets quickly depleted by the cost of paying for long-term health care. As their child, you’ll want to help them protect those assets (and your own inheritance) from being eroded by long-term care costs. One solution to this dilemma might be long-term care insurance (LTCI).
Help is on the way
Generally, LTCI helps pay for the care of an individual who can no longer independently perform the basic activities of daily living, such as bathing, dressing, eating, and toileting, due to a cognitive disorder, illness, or injury. A comprehensive policy will cover skilled, intermediate, and custodial care in a variety of settings, including nursing homes, assisted-living facilities, adult day-care centers, or the insured’s own home.
The cost of LTCI policies can vary widely, depending on many factors, including the coverage selected and the age and health of your parents. The younger and healthier they are, the less expensive the insurance will be–but the longer they might pay for it before they really need it.
Who most likely needs the help?
Deciding whether to purchase LTCI will take some careful consideration. LTCI might be right for a parent if at least some of the following criteria apply:
- He or she is between the ages of 40 and 84
- There’s a family history of Alzheimer’s disease
- He or she has significant assets to preserve as an inheritance or to gift to charity
- He or she has an income from employment or investments in addition to Social Security
- The cost of the premiums will not exceed 5 to 7 percent of your parent’s annual income (or yours, if you’re paying the premiums)
- He or she is healthy enough to be insurable
Conclusion
Long-term care insurance can be a powerful tool to help your parents preserve their assets, maintain quality care options, and avoid becoming financially dependent on family. While it’s not right for everyone, LTCI is worth considering—especially if your parents are healthy, have assets to protect, and meet key eligibility criteria. By evaluating their needs and options now, you can help ensure a more secure and dignified future for them—and greater peace of mind for your family.
Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here. Click here to sign up for our newsletter with the latest economic news.
Source:
Broadridge Investor Communication Solutions, Inc. prepared this material for use by Scarlet Oak Financial Services.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on individual circumstances. Scarlet Oak Financial Services provide these materials for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
