Long Term Care (LTC) insurance is designed specifically for individuals ages 65 or above who have a disability or a chronic condition that needs constant care and supervision. This insurance covers home health care, nursing home care, adult or personal daycare. The majority of public assistance programs lack the facilities and flexibility that LTC insurance provides.
If you are a Floridian, you may be wondering about different options in LTC insurance. Boca Raton has some of the best LTC insurance policies that you could benefit from. There are also multiple LTC insurances; read on to find out.
Types of LTC Insurance
There are two types of LTC insurance policies, traditional or stand-alone policy and hybrid policy.
Stand-alone policies, also known as traditional policies, offer a cost-effective solution for paying for long-term care expenses. You don’t have to pay a lump sum amount altogether. The stand-alone insurance policy gives you a monthly coverage of $4000 – $12000 monthly, which varies on multiple factors:
- The insurance company
- The length of the benefit ranges from a period of 2 to 6 years.
- How long is the elimination period (the time it takes for your insurance coverage to activate)
- Your age at the time you apply
- And whether the policy provides an inflation protection rider. This means that your coverage will increase over time to keep up with inflation.
Also known as Asset Based Long Term Insurance, a hybrid policy provides coverage for 3 to 5 years with an elimination period of 30 to 180 days. Hybrid policies also offer inflation protection for 3% to 5% increases annually.
The main distinction between a hybrid and a traditional policy is the lump sum payment you have to pay in hybrid policies, which cost you around $100,000 upfront! Hybrid policies combine two forms of coverage into one insurance plan: annuity hybrid insurance and life insurance.
- Life Insurance Hybrids: this policy combines life insurance and long-term care. If you die without the need for any long-term care, your family will receive the death benefit of the policy’s value. However, if long-term care is needed, the policy will provide coverage for the care needed and won’t pay any death benefit.
- Annuity Hybrids: this policy includes all the basic elements of a traditional insurance plan with the added benefit of a separate cash fund which you can use however you please. There is no elimination period to start accessing the long-term fund, but to access the cash portion requires you to wait for some time.
Benefits Of Buying An LTC Insurance
Approximately 70% of Americans aged 65 and over require long-term care and services, with an average of 3.7 years required by women and 2.2 years by men. Most regular medical insurances don’t cover long-term care, and government programs lack the flexibility and facilities.
If you don’t have LTC insurance, you will have to pay for the services yourself, which could exhaust all or most of your savings. The main advantages of buying long-term insurance are:
- To secure your savings: the average cost in a semi-private nursing home is approximately $90,000 a year. Even if you don’t require a lot of medical attention, long-term care expenses could quickly empty a retirement fund.
- To provide you with more options for care: relying on public assistance programs doesn’t give you many health care options, and the only option you might have is a nursing home funded by the government. A number of states don’t include assisted living in their public programs. Buying and LTC insurance give you multiple care options like assisted living, nursing homes, or daytime programs. It also covers daily activities like bathing, dressing, eating, caring for incontinence, toileting, and transferring.
- Tax advantages: LTC insurances can also provide some tax benefits. According to some federal and state tax rules, LTC insurance premiums can be counted as medical expenses, which are tax-deductible if they achieve a particular threshold. Furthermore, the amount of deductible premium increases with your age.
At the Center for Long Term Care Planning, we provide the best insurance rates with multiple long-term care services. We have been providing a better understanding of LTC insurance policies for over three decades and conduct our operations following the Ethical Promotion of Long-Term Care Insurance Guidelines.