Mention long-term care insurance to most Americans and their eyes will glaze over.
Frankly, most people don't want to dwell on growing old and how they are going to pay for home-health care, a room at an assisted-living facility and/or a nursing home stay. Some believe (probably erroneously) that the good old U.S. government — and the twin shields of Medicaid and Medicare — has got them covered.
But for those who have worked a lifetime to build a modest (or even substantial) next egg, long-term care (LTC) insurance can provide asset protection and peace of mind against becoming a burden on their children, experts say. Medicare only provides for very short nursing-home stays, and Medicaid regulations require recipients to spend down their assets to a scant $2,000 (basically exempting only a house and an automobile) before kicking in.
Middle managers and small-business owners are often prime candidates for long-term care insurance, experts say. And baby boomers — many of whom are now witnessing their parents struggle with long-term care costs — are in the sweet spot for acquiring coverage before they get too old and sick to qualify.
Meanwhile, many companies have stopped offering long-term care insurance as part of their group employee benefits packages. Chattanooga-based Unum, previously a leading underwriter of long-term care group policies, has gotten out of the business except for servicing existing accounts, according the M.C. Guenther, a company spokesperson. Some of the major players in LTC insurance are Genworth, John Hancock and Mutual of Omaha.
About 70 percent of people over age 65 will eventually need some type of long-term care, according to the U.S. Department of Health and Human Services. The population of people over age 65 in the United States is more than 45 million today and is expected to grow to 74 million by 2050, according to the U.S. Census Bureau.
Meanwhile, the cost of long-term care continues to climb. In 2015, the average cost of a year in a skilled-care nursing home in Chattanooga was about $89,000. At the same time, the cost of a one-bedroom apartment in an assisted-living facility here was about $41,000, according to Gail Lindsey, of Lindsey & Associates, a local company that specializes in matching customers to long-term care policies.
"Three out of four people are going to need some kind of care," Lindsey says. "Either you're going to die quickly, or you are going to need some sort of nursing home care."
The price of long-term care insurance is filled with variables including monthly limits on benefits, elimination periods before coverage begins (typically 90 to 180 days) and inflation protection on benefits (often 3-percent per year).
Lindsey said a 60-year-old Chattanooga couple in good health and of average height and weight can get a three-year long-term care policy paying up to $3,000 a month in benefits for $2,500 a year, or about $200 a month. That includes a three-percent per year inflation multiplier, she said.