Thursday, August 30, 2007

Some Thoughts on LTCi

It's been a while since we've discussed the role and importance of Long Term Care insurance (LTCi) coverage. But as our population ages (and the "Boomers" are now knock, knock, knockin' on Medicare's door), the need for asset protection becomes more and more critical.
And make no mistake about it: LTCi is about protecting assets, not people. In that regard, it's much more closely related to homeowners than life or even health insurance.
Well, let's look at it this way: one of the most prevalent uses of life insurance is to replace income.
But homeowners insurance is primarily about protecting the asset that is your house (and, of course, its contents). If it were to be burgled, you'd want some help replacing the new plasma TV, and maybe that van Gogh you had hanging on the wall [ed: yeah, riiight!]. If there were a fire, you'd want some help cleaning up the mess, and rebuilding your dream home.
In the same way, if you need long term care, you'd want your assets to last as long as possible, to preserve your choices (and, perhaps, your dignity). And that's how LTCi works: it enables you to use less of your own hard-earned money (cash, stocks, whatever) while you receive care that's generally excluded by Medicare.
Of course, there's Medicaid, but that requires a costly "spend down" process, which can quickly drain away all those hard-earned dollars.
Don't believe me? Well, let's see what The Street's Senior Health Analyst, Donna O'Rourke, has to say on the subject:
In fact, according to industry leader Genworth Financial, home health care (let alone in a nursing or other long term care facility) costs an average of $53,000. It's not hard to see how quickly one can "burn through" one's nest egg.
As Donna mentions, many states have now set up "partnerships" to encourage (and help) folks to purchase their own coverage. One of the "perks" of these plans is that participants get a break on the Medicaid spend-down rules, which would look primarily to exhaust the policy, not one's bank account.
Currently, over a dozen states have set up (or begun to set up) these partnership arrangements, with another 15 or so "on deck." To check to see whether or not your state is on board, check with your professional, independent agent (this kind of insurance is definitely not DIY), or your state's Insurance Department.
Don't put it off.
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