Myths & Truths: Long-Term Care
Myth: You don’t need to start thinking about long-term care protection until retirement.
The Truth is: Long-Term Care Insurance premiums are based on your age when you apply, and costs increase 8-9 percent for each year you wait. Insurance companies offer incentives for individuals who are in good health when applying for long-term care coverage. So, you will pay less if you purchase insurance when you are younger and in good health.
Myth:Long-term care insurance is just too expensive.
The Truth is: Insurers offer discounts for spouses (and in some cases partners) who apply for protection, which can reduce the cost by 15-40 percent each year. Some products offer “shared care” features that allow spouses to tap into each other’s benefits when one exhausts his or her own maximum lifetime benefit. The federal government and some states now offer tax deductions and/or credits to individuals and business owners who purchase long-term care insurance. The cost may be 100 percent tax deductible for business owners. Plus, it is possible to purchase “limited pay” policies so that insurance protection is paid-in-full prior to retirement age.
Myth: It’s too late to purchase long-term care insurance.
The Truth is: Most experts agree that the younger you are, the more coverage options and better rates you will find. However, there are products that are designed with those 65 and older in mind.
Myth: Medicare will pay for any long-term care you might need during retirement.
The Truth is: Medicare covers skilled nursing facility care only after a three-day hospitalization. It does not pay for personal, custodial or intermediate care, which is the majority of care provided in nursing homes. Long-term care insurance covers a variety of personal and custodial services, nursing homes, assisted living facilities and at an individual’s home — even housekeeping services.
Myth: You can transfer assets to a child to qualify for Medicaid.
The Truth is: After you have exhausted all of your assets, you may qualify for coverage under Medicaid. However, with Medicaid you lose choice over the care received. In addition to nursing home care, long-term care insurance covers home health care services, assisted living facilities, hospice care and adult day care. Under new law, the federal government can look back up to five years for outright gifts to your children or other relatives and the equity in your home could be counted as an asset.