The Need for Long-Term Care Insurance

When I was a youngster many years ago, my mother taught me to look both ways before crossing the street. I was precocious and told my mother that on a one-way street, I only had to look one way.

My mother told me that I could not always be sure the street was one way and that traffic might just come from another direction. She simply said: “You have too much to lose if you are wrong.”

In my role as a financial adviser to almost 10,000 participants across the country, I have begun to think that too many advisers and participants are only looking one way. Focused on retirement, savings and returns,   both advisers and participants are worried about having enough money so they won’t outlive their savings.

I want all my participants to reach a comfortable retirement, and most are on the right track. Unfortunately, very few are prepared for a serious health issue in retirement.  My mother had a long-term health problem called Parkinson’s and it impacted the entire family. It impacted my father’s business career, his retirement and his retirement savings. It impacted the children as we became care givers in order to offset the cost of long-term care. It was a game changer for my father and his retirement savings.

Today the statistics are pretty simple:  1 in 2 people will be affected by long-term care costs 1. Most men who need long-term care are taken care of by their wives; so the long-term care costs are offset until she needs care.

The costs of long-term care can be between $50,000 to $100,000 per year2. If the average retiree has to incur that cost over a long period of time, it will take a huge bite out of their retirement savings.

Medicare won’t cover long-term care services3. Medicaid won’t pay unless you have spent most of your life’s savings.  The amount of countable assets you can have and still qualify for Medicaid varies state to state. In most states you can retain $2,0004. So the answer is simple: if you think that you are set for retirement look both ways and purchase some long-term care insurance instead of relying solely on your 401(k)/retirement assets to cover your long-term care needs.

I have been introducing long term care insurance to my plan sponsors. It is a benefit that the company can provide as a tax deductible benefit and they can offer it to their employees as something the employees can purchase at a discount. Discounts for employer-sponsored plans are available to employees, spouses and extended family members5.  If a group meets certain criteria, it may be eligible for simplified health underwriting.6. The premium can be paid through a Health Savings Account which is pre-tax dollars7.

I have seen plans where senior management has a fully funded plan, junior management has a reduced plan, hourly employees get an offset to the cost and new employees pay all their plan cost—and every combination in between. Long-term care is not a qualified benefit where everyone gets the same thing. 

Obviously, Uncle Sam does not want everyone in a nursing home on Title 19 Medicaid, and Uncle Sam has reduced the rules so that long-term care insurance is more attractive.

Take a look at long-term care employer-sponsored plans and show them to your plan sponsors.  We are here to help everyone work toward a successful and dignified retirement. We are here to help the families of all of our participants and teach them to look both ways before crossing the street into retirement.

If you need some help finding a worksite long-term care provider, call or email me. I am interested in helping your participants plan for a successful retirement too.













NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. In addition, the following disclaimer will be included in all articles: Any opinions of the author(s) do not necessarily reflect the stance of Asset International or its affiliates.