If retirement is on your mind, you should review your need for Long Term Care (LTC) insurance. Most people know that LTC covers nursing home stays. But it can also cover a wide range of services such as unskilled home care, home health care, adult day care and even assisted living facility care.
LTC benefits kick in when you can no longer perform specific basic activities of daily living due to age or infirmity. These basic yet essential activities include eating, dressing and bathing. Benefits can also kick in if there is a cognitive impairment such as dementia or Alzheimer’s.
Like any other significant purchase, you should shop around and compare variables such as the elimination period and the list of covered services. Elimination periods are typically anywhere from 0 to 180 days. A shorter elimination period means services will be covered sooner, but will have a higher premium than coverage with a longer elimination period. Think of the elimination period as your ‘deductible.’ It’s the period you have to pay out-of-pocket for the services you need.
Benefits under a LTC policy are measured in dollars per day. Typical benefits range from $50 to $250 dollars per day of coverage. In many cases, policy-holders can expect to ‘self-insure’ a certain part of their daily coverage through their own resources. For example, a needs assessment might find you require $150/day of LTC coverage. If you know your retirement income can safely provide $50/day of income, you can consider buying only $100/day of coverage to meet your LTC needs.
Let’s talk about what LTC really covers: LTC protects your life savings. When you buy LTC insurance, what you are really buying is protection for your assets. It covers the risk to your (and your spouse’s) financial security from the enormous expenses associated with medical, personal and social services you might need as you age.
Most federal employees have access to an excellent voluntary LTC program called the Federal Long Term Care Insurance Program (FLTCIP). For more details, click here. In general, anyone eligible for the Federal Employees Heath Benefits (FEHB) program, you are probably eligible for FLTCIP. Contact your HR department for your particular situation.