Few of us want to face up to the struggles advanced age can bring, much less plan for them. But since it’s a good bet that you’ll live longer than previous generations in your family, you have to ask yourself this question:
Will I be able to afford those extra years without demolishing my lifetime of saving when I need long-term care?
This is an important question since the cost of long term care is a financial threat that can wipe you out in no time…especially in Connecticut.
So what do you do?
Here are your choices:
1) Do nothing, and pray that just because 7 out of 10 people have a long-term care need it won’t happen to you or your spouse,
2) start to transfer your assets so that you might be eligible for Medicaid in the future, or
3) consider long term care insurance, but be very smart about the policy you buy.
How can you evaluate a policy if you don’t know much about it? Here are some tips to get you started:
- Don’t wait too long. Although there is no perfect age, it’s important to buy it when you are younger, healthier, and more likely to be approved for coverage.
- Choose your benefit period wisely. This is the amount of time you will receive benefits once a claim begins. The average claim lasts 2.5 years.
- Learn what is covered and what is not. Make sure you find out what kind of care is included and in what type of facility. Does it cover adult day care, respite care for the primary caregiver and hospice services?
- Think through your daily benefit. This is the amount a policy will pay per day. Checking the average cost for care in your area is the smartest way to help you decide your daily benefit.
- Plan for inflation. If you choose a carrier within the CT Partnership and you’re under 65, your coverage will have a 5% compound inflation protection.
- Ask about the benefit triggers. The more triggers a policy requires, the harder it is to collect benefits. Generally, benefits kick in when you need help with activities of daily living such as bathing, dressing, eating, etc.
- Consider the waiting period. This is the number of days you must pay for your care before the plan starts to provide you benefits. The most typical elimination period is 90 days.
- Request asset protection. You are fortunate to have access to the CT Partnership which endorses policies that offer asset protection should you ever need to apply for Medicaid.
- Be a smart shopper. Go with a well-known company and research their financial strength and rate increase history.
- Know the risks. Talk to an elder law or estate planning attorney about how and whether it fits into your estate planning goals.
Bottom line: the cost of long-term care is a financial threat with devastating consequences for you, your family and your investment portfolio.
Whether it’s a long-term care insurance policy or another mechanism for protecting your hard-earned savings, it is imperative that you put some kind of plan in place. If you don’t, you will be placing an insurmountable burden on your love ones and you will be risking, not only your entire nest egg, but your peace of mind.