5 Reasons the Middle Class Isn’t Planning for Long-Term Care Insurance
Written by
Chris Adam
Edited by
Rebekah Evans
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When it comes to talking about healthcare as families, particularly for those who are younger in age, financial planning for long-term care may not be on the radar. Long-term care insurance helps to cover care that lasts longer than a few months and involves assistance with daily activities.
According to the Administration for Community Living, someone turning 65 today has nearly a 70% of needing these long-term care services in the years ahead. Even with this high percentage, here’s a look at five reasons the middle class aren’t planning for long-term care insurance.
They Think There’s No Need
One of the top reasons why middle-class families aren’t planning for long-term care insurance is that they either underestimate the need for it or think they won’t need it at all, according to Kelly Augspurger, certified senior advisor (CSA), certification for long-term care (CLTC), long-term care claims professional (LTCCP) and long-term care insurance specialist with Steadfast Insurance.
“People also underestimate the consequences to their family and finances when care is needed,” said Augspurger. “Providing care can be very taxing physically, mentally, emotionally and financially.”
They Don’t Know About Long-Term Care Insurance
Augspurger said many middle-class people have never heard of this insurance or they don’t know much about it. While many people may think it only pays for nursing home care, today’s policies are comprehensive and can pay for home care and facility care, according to her.
They Think It’s Too Expensive
A person’s age, health, gender, benefits and riders chosen, along with the type of policy, will determine the premiums for long-term care insurance. Augspurger said even a small policy with a starting monthly benefit of $2,500 with a two-year benefit period and a 3% inflation protection (growth) can be very helpful and take pressure off a person’s finances.
Here’s a quick look at how much it might cost, according to Augspurger. Take a 55-year-old couple in average health and living in Ohio. If they want a traditional or stand-alone policy with a starting monthly benefit of $3,000 each, a three-year benefit period each, 3% inflation protection and shared benefits, their combined monthly premiums would be about $340.
They Think Other Programs Will Help
“Many people believe that Medicare will cover most or all the cost of long-term care for everyone, but that’s simply not true,” Augspurger said. “Qualifying for Medicaid can be an expensive proposition because you need to spend down assets.”
In addition, Augspurger said, “If you want to stay in control of your care options with high-quality care, then Medicaid is not the route you want to take.”
They Think They Should Self-Fund Their Care Costs
Based on her work as a long-term care insurance specialist, Augspurger said the default plan for most middle-class people is to self-fund and/or rely on their family to provide care. However, Augspurger said, most people who buy long-term care insurance are still going to self-fund a portion of any needed care.
“Their policy is meant to be their base or foundational coverage and anything above what their policy doesn’t cover, that’s when they will fill in the gaps with their other income,” Augspurger said. “That’s how insurance works effectively — we co-fund. We take on some of the risk ourselves, but transfer a good chunk of it to the insurance company.”
There are certainly lots of factors to consider with long-term care insurance. Financial expert Dave Ramsey is an advocate for this type of insurance and for families having a plan when it comes to this area of personal finance.
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