Understanding Long-Term Care Insurance

Approximately 49 percent of men and 64 percent of women reaching age 65 today will need long-term care in their lifetime. But affording it can be a challenge. For some, long-term care insurance can be an effective way to prepare for future healthcare needs without breaking the bank.

While long-term care planning can seem overwhelming, it is essential to successful estate planning. At Pennington Law PLLC, our experienced Arizona estate planning attorneys can guide you through the process to protect your health, finances, and legacy.

What is Long-Term Care?

Long-term care (LTC) refers to medical and non-medical assistance people need if they cannot perform basic “activities of daily living” (ADLs). People may require long-term care services due to advanced age, chronic illness, or cognitive impairments.

Typical ADLs include:

•  Eating
•  Bathing
•  Dressing
•  Toileting
•  Cleaning
•  Mobility

Types of Long-Term Care

Long-term care encompasses more than just the traditional nursing home setting. Examples of residential and non-residential options for long-term care include:

• Nursing homes – Residents receive supervision 24 hours a day, including medical care, daily meals, personal care, and rehabilitation services.
• Assisted living facilities – Typically, these are non-medical facilities where residents have their own room or apartment. They may need some help with ADLs but are still healthy and active.
• Residential care homes – Group homes (usually with 20 or fewer residents) provide similar services as assisted living facilities but are smaller.
• In-home care – Many people receiving in-home care use a variety of providers, such as a long-term care health aide, housekeeping services, and family caregivers.
• Community-based health care services facility – Non-residential services are offered at a community facility.

How Much Does Long-Term Care Cost?

While long-term care costs differ by region, it is usually very expensive. Recent estimates show the cost to live in an Arizona nursing home in semi-private care is $7,832 per month. For private care, it’s $9,712 per month.

Generally, assisted living facilities are more affordable than nursing homes. Nationwide, the estimated median cost of an assisted living facility is $181 per day, which comes to $5,511 per month, or $66,126 per year.

These figures don’t account for specialized care services, like memory care.

Do I Need Long-Term Care Insurance?

Deciding whether you want long-term care protection may depend on your current health, financial situation, or retirement goals. Purchasing a policy is expensive, and premiums can make long-term care insurance cost-prohibitive for some. Others may be able to afford a policy but unable to qualify due to pre-existing conditions.

From an estate planning perspective, you may qualify for long-term care funding through Arizona’s Medicaid system if you meet certain income and asset thresholds. An experienced attorney can determine whether any estate planning tools, such as trusts, could make you eligible for public benefits without the need for long-term care insurance. If you choose to purchase coverage, keep in mind that premiums are generally lower for people in their 40s and 50s than for those over age 65.

Tips for Choosing the Right Long-Term Care Insurance Policy

Not all insurance companies are created equal, especially when it comes to long-term care. Rates can vary widely among insurers. The Arizona Department of Insurance has a list of LTC insurance companies that offer coverage in the state to encourage consumers to shop around.

Other considerations before purchasing a policy include:

•  Duration of benefits
•  Benefit triggers
•  Waiting periods

Avoiding Common Pitfalls

When shopping for long-term care insurance coverage, avoid:

•  Waiting too long to get coverage
•  Buying a policy that you won’t be able to afford in the future
•  Underestimating the impact of inflation

If you have questions about whether long-term insurance is appropriate for your estate planning goals, talk to an attorney before making any decisions.

Start Planning Your Financial Future Today

At Pennington Law, PLLC, we help Arizonans make intelligent estate planning choices to protect their finances, future, and families. Contact our legal team today for a free consultation.