Understanding Long-Term Care Insurance: A Guide from Loving Family Cares
Long-term care insurance is a critical component of financial planning for those who may need assistance with daily living activities or care for cognitive impairments like Alzheimer’s or dementia. At Loving Family Cares, we recognize the importance of understanding long-term care insurance in New Jersey to prepare you and your loved ones for the future.
What Exactly is Long-Term Care Insurance?
Long-term care insurance generally covers the costs associated with assistance in daily activities such as dressing, eating, bathing, transferring in and out of bed or a chair, and using the bathroom. It also supports those diagnosed with severe cognitive impairments, such as Alzheimer’s or dementia, or chronic illnesses and injuries that require extended rehabilitation and care.
Long-term care insurance can be purchased as a stand-alone policy or bundled with life insurance in a “hybrid” plan, offering flexibility based on individual needs.
How Does Long-Term Care Insurance Differ from Traditional Healthcare Insurance?
Traditional health insurance typically covers restorative treatments—services aimed at recovery and rehabilitation. According to Christine McCullugh, president of LTC Solutions, Inc., traditional insurance is designed to help you get better after a hospital visit. In contrast, long-term care insurance includes custodial care, such as nursing care, assistance with daily activities, and medication management.
These two types of insurance complement each other and are often recommended to ensure comprehensive coverage throughout life. Notably, Medicare does not cover the extensive costs of long-term custodial care, a common misconception.
Who Needs Long-Term Care Insurance?
A report from the U.S. Department of Health and Human Services indicates that about 70% of Americans over age 65 will eventually require long-term care services. Therefore, individuals and families should consider long-term care insurance to plan for the rising care costs.
McCullugh emphasizes that long-term care isn’t just for those over 65. Younger individuals can also benefit, especially if they experience a stroke, a car accident, or early-onset dementia.
When is the Right Time to Get Long-Term Care Insurance?
The optimal time to purchase long-term care insurance varies, but buying when you’re in good health is generally advisable. Waiting until your 60s or 70s can limit your options, increase premiums, and potentially disqualify you from coverage due to age-related health issues. As McCullugh notes, “The longer you wait, the more you’ll pay in premiums.”
Is Long-Term Care Insurance Tax-Deductible?
Long-term care insurance premiums may be tax deductible, depending on various factors. It’s essential to consult with a CPA or tax attorney to understand the specific deductions available to you.
How to Obtain Long-Term Care Insurance
Some employers offer long-term care insurance as an optional benefit. If not, financial advisors and local insurance agents can assist with obtaining a policy. McCullugh recommends consulting a licensed long-term care specialist in your state to explore your options based on your health history and financial goals.
Cost of Long-Term Care Insurance
The cost of a long-term care insurance policy depends on factors such as age, health, coverage amount and duration, and the policy’s specific terms. In 2023, the American Association for Long-Term Care Insurance reported that the average cost for a 65-year-old in good health was approximately $1,700 per year for men and $2,700 per year for women, with an initial policy benefit of $165,000.
As McCullugh explains, “It comes down to proper plan design.” Much like buying a car, the fundamental function is the same, but the specifics can vary widely based on personal preferences and needs.
Final Thoughts
At Loving Family Cares, we understand the importance of preparing for the future. Long-term care insurance in New Jersey ensures that you or your loved ones receive the necessary support while managing the costs effectively. Contact us for guidance and support in navigating your long-term care insurance options.
