Long Term Care

Long-term care (LTC) cost is surging. The national average of LTC cost is $200/day ($75000/year). However, the private health insurance and Medicare have limited coverage on LTC expenses. The person who needs LTC will need to pay for the uncovered expenses out of pocket.

Generally speaking, as long as they lose 2 of 6 selfcare abilities of eating, dressing, bathing, toileting, mobility and bowel control and loss of cognitive ability, they are eligible for long term care benefits covered in the long term care insurance plan.

Why need long-term care insurance?

Health insurance doesn’t cover long-term care expenses.
Medicare will cover some long-term care costs, but only up to 100 days (after a 3-consecutive-day stay in a hospital under treatment).
Medicaid will cover long-term care expenses for individuals with assets of $2,000 or less (countable assets according to Medicaid regulations; varies by state) and covered care could be limited to a nursing home.
Paying for care out of pocket isn’t practical or cost-efficient for many people.

What are the odds of needing long-term care?

1 in 1200 needing homeowners' insurance for serious damage
1 in 2 needing some form of long-term care
3 years is the length of service for 90% of all long-term care
Adults ages 18 to 64 make up about 40% of people needing long-term care.

What is long-term care coverage?

Long-term care (LTC) is any personal assistance needed to maintain the quality of life while getting older. The majority of us will need LTC at some point in our lives.
In fact, 7 out of 10 people turning 65 will need LTC at some point in their lives. Long-term care insurance coverage can be added to a life insurance policy, either as a rider or linked benefit, to help cover LTC expenses.
Some people think that long-term care only covers nursing home expenses. In reality, half of all long-term care services are provided in the home. Long-term care coverage was developed to help offset the cost of these services.

Mandatory tax on people in Washington State who don't have long term care insurance.

A mandatory payroll tax to fund Washington state’s new long-term care program will start coming out of most workers’ paychecks across the state in January 2022. The insurance benefit, dubbed the WA Cares Fund, is a first-in-nation public insurance program aimed at helping older residents age in their own homes. The plan, signed into law in 2019 through the Long Term Care Trust Act, will use a 0.58% payroll tax to pay up to a $36,500 benefit for individuals to pay for home health care and an array of services related to long-term health care including equipment, transportation and meal assistance. People can apply for an exemption if they can demonstrate they have other long-term care insurance purchased. In addition to Washington State, there are 12 other states are considering long term care tax.

There is an option that are perfect for these purposes.

Life insurance with Long Term Care (LTC) rider
Standalone long-term care (LTC)

Life Insurance with Long Term Care rider versus stand-alone Long Term Care insurance.

Life Insurance with Long Term Care rider

Cash indemnity style.
There's no need to submit monthly bills or receipts once a claim is approved.
Care at home is allowed. Informal caregivers are permitted, including family members.
If long-term care benefit is not used, a return of all premium is guaranteed.
If all LTC benefits are used, beneficiaries will still receive a 20% minimum death benefit guaranteed.
100% of their monthly cash benefit guaranteed. Any unused benefits can be spent on other expenses or saved for future use. No restrictions on how LTC benefits can be used.

Stand-alone Long Term Care insurance

Reimbursement-style.
Bills and receipts must be submitted monthly
May limit or not allow reimbursement for unlicensed informal caregivers.
Premiums are generally not refundable.
There are no death benefits.
Only qualifying LTC expenses are reimbursed and cannot exceed the maximum monthly benefit limit (nothing extra is paid).

The long term care insurance is cheaper when it is purchased at a younger age. Take an example of life insurance with long term care (LTC).

Male | age 20 | monthly premium $198 | monthly benefit $10,000 | death benefit $500,000
Male | age 30 | monthly premium $264 | monthly benefit $10,000 | death benefit $500,000
Male | age 40 | monthly premium $422 | monthly benefit $10,000 | death benefit $500,000
Male | age 50 | monthly premium $702 | monthly benefit $10,000 | death benefit $500,000

Female | age 20 | monthly premium $173 | monthly benefit $10,000 | death benefit $500,000
Female | age 30 | monthly premium $242 | monthly benefit $10,000 | death benefit $500,000
Female | age 40 | monthly premium $384 | monthly benefit $10,000 | death benefit $500,000
Female | age 50 | monthly premium $619 | monthly benefit $10,000 | death benefit $500,000

Life Insurance Long Term Care Rider vs Chronic Illness Rider Comparison

ADLs (Activities of Daily Living)

Feeding.
Toileting.
Bathing.
Selecting proper attire (Dressing).
Maintaining continence.
Walking and transferring.

LTC Coverage Comparison

The person who needs LTC is likely to pay for huge expenses out of pocket if without long term care insurance plan.

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