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Long Term Care  Planning for long term care needs

What is Long Term Care

Long term care is the assistance provided when a person is unable to provide for himself or herself as the result of disability or a prolonged illness.  It ranges from providing personal care at home, such as bathing and dressing, to skilled nursing services in a nursing home.  Long term care is offered through home care agencies, senior centers, adult day care centers, traditional nursing homes, and retirement communities that provide ongoing care.

Who Needs Long Term Care Insurance

A long term care insurance policy is not for everyone , but does make sense as an affordable and worthwhile form of insurance for some.  It depends on your age, health status, overall retirement objectives, income and wealth, and should not cause financial hardship or force you to forego other financial needs.   Whether long-term care insurance is appropriate really requires a full financial analysis.  These policies are for people who want to preserve assets for family members, to assure independence and not burden families members with nursing home bills.  Never buy a policy if:

bulletPaying the premiums will be a burden.
bulletIf the only source of income is a minimum Social Security benefit or Supplemental Security Income (SSI).
bulletIf paying utilities, food or medicine stretches a budget.
bulletIf you have Alzheimer's or Parkinson's disease. No company will want to sell you a policy since they will face losses.

Although the need for long-term care can arise gradually as a person ages and needs more and more assistance with activities of daily living, for most a stroke or a heart attack will be the precipitating need. Those with acute illnesses may need nursing-home care for a matter of months, while others may need care for years.

What Are the Chances That You Will Need Long-Term Care?

Recent studies based on nursing home admissions indicate that 40% of all persons age 65 and over will enter a nursing home in the future.

"If you're 65 or older, you have roughly 10 times the chance of going into a nursing home as you do having your house burn down.  You wouldn't go without homeowners's insurance, so why not insure against the greater risk with long-term care insurance?" 

- Chicago Sun-Times, February 21, 1999 - 

What Portion of These Expenses Will Be Paid by Medicare?

A study conducted in 1987 showed that Medicare paid for less than 2% of the costs and private insurance paid for even less. Medicaid paid for 42% of the expenses, and the patient or his or her family paid over one-half of these costs.

Comment:

The management of risk is a crucial part of financial planning. The potential need for long-term care is a genuine risk. The prudent estate owner will examine long-term care insurance to see if it has a proper place in his or her overall financial plan. Once the disabling condition appears, it is obviously too late to act.

Library of Articles:

bulletComparison of Tax Qualified and Non-Qualified LTC Policies
bulletTax Considerations of Long Term Care Insurance
bulletWhat is Medicaid
bulletCan Medicaid Help Pay for Long Term Care
bulletWhat is Medicare
bulletKnow the Basics About Medicare
bulletCommon Elements in Long Term Care Policies
bulletGuide To Long Term Care Insurance - PDF file
bulletChoosing A Nursing Home

 

 

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Securities offered through Sigma Financial Corporation. A registered broker/dealer. Member FINRA & SIPC.
Planning Services offered through Sigma Planning Corporation, a registered investment advisor.

Any information contained on this site does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser licensed in your state.

We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

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Last modified: 10/30/09