How to Plan for Growing LTC Insurance Costs
LTC insurance rates have gone up.
Annual inflation increases all citizens’ costs of living; however, long-term care (LTC) insurance costs rose considerably more than average in the past year. Premiums for LTC insurance in 2015 are 8.6% higher than rates in 2014, according to the Long-Term Care Insurance Price Index.
Insurance conglomerate Genworth breaks down the median annual long-term care costs in North Carolina as of 2014:
- Nursing Homes – $82,125 for private room
- Assisted Living – $35,280 for private room
- Home Health Aide – $40,040
Genworth’s study suggests that nearly 75% of individuals in North Carolina over the age of 65 will require long-term care services such as the ones noted above. Covering these costs without LTC insurance could deplete an aging person’s life savings or exhaust funds that were intended to pass on to children or grandchildren.
With no anticipated drops in insurance rates, how can individuals update estate plans and structure assets to compensate for the growing costs of LTC insurance?
1. Policy research. Review several LTC policies before choosing one and do so with the guidance of a North Carolina estate planning attorney with elder law experience. A single LTC policy does not necessarily have to cover every possible care cost. An attorney might advise the use of Medicaid Trusts or other asset preservation tools that will help protect assets for loved ones while at the same time maintaining the policy holder’s eligibility for public benefits.
2. Consider gender and age. Women’s insurance rates are generally higher than men’s, and the life expectancy for women is also longer. The latest figures from the American Association for Long-Term Care Insurance show that 2015 annual rates for women are 24% greater than rates for men.Financial Planning suggests individuals wait until their mid-50s before purchasing LTC insurance as there is little benefit to lower premiums before this age.
3. Avoid delays. Waiting too long to review LTC insurance options could result in ineligibility. Most policies are not available for individuals aged 80 or older. A LTC insurance policy might not be a priority for a relatively healthy senior, but the expenses of unforeseen health conditions late in life should not be ignored in a comprehensive estate plan.