Question: My husband and I are in our late 40s and we were wondering if we should buy long-term care insurance.
- Amy S., Colorado Springs
Answer. Long-term care (LTC) insurance covers the cost of caring for someone unable to perform certain basic daily activities or with a chronic illness such as Alzheimer’s.
U.S. government statistics indicate that 70 percent of people 65 and older will require long-term care services at some point in their lives. These services can be very expensive if you have to pay for them out of your own pocket.
According to Colorado Springs-based LTC expert Lisa Benson, full-time custodial care in the home could cost up to $47,400 per year. If you opt for a Colorado Springs nursing home with a private room, you could end up paying about $80,000 per year.
The question I am often asked is, “How we can possibly afford long-term care on a tight budget?” This is when it pays to consult an LTC specialist to help you customize coverage that fits your budget. Benson says you can add a more comprehensive policy later on when your funds allow. In the interim, some level of protection – no matter how modest – is better than none.
If you have very limited financial resources, you may qualify for Medicaid-provided LTC. In Colorado, your income cannot exceed $2,022 a month with no more than $2,000 in total assets. For more information on Medicaid eligibility, check out the Colorado’s Healthcare Policy and Financing website at http://tinyurl.com/3jhmn2w.
More and more young people are buying long-term care insurance. Younger people now realize that it’s not just for their aging parents but also for themselves for reasons such as strokes, Parkinson’s disease, cancer, multiple sclerosis and debilitating accidents.
Benson says that most new policy holders are in their 50s, but in instances where it’s offered as an employee benefit, many are in their 40s. It is never too early to plan for your future long-term care needs. I’d advise getting LTC insurance as soon as you can afford it, because it will cost more as you get older and your health could change, making it difficult to obtain this coverage.
Look for a policy that will cover you for at least three years, which is the average time people need this type of care.
The bottom line: If you wish to remain independent, have choices when it comes to your care, not be a burden to your loved ones and protect your assets, you should seriously consider long-term care coverage.
Mystified by money and want to improve your financial effectiveness? Denisa Tova CFP®, CDFA, MBA is a Colorado Springs-based Certified Financial Planner and a Certified Divorce Financial Analyst. Contact her at DenisaTova.com or email denisa.tova@gazette.com.
