As discussed in a recent U.S. News and World Report article titled, “Why No One Can Afford Long-Term Care Insurance (and What to Use Instead)”, there are many factors pushing up the costs of long term care insurance. Policies issued in the 1980s and 1990s assumed that many people would drop policies as they got older. Additionally, people are living longer but not necessarily healthier. Because of this unexpected upward pressure on prices, many companies have left the market or are charging significantly higher premiums to keep up with costs. While there are ways to decrease the cost of long term care insurance such as buying it at a younger age, it may simply be too expensive in some situations. Below are a few other ways to pay for long term care.
- Short term care insurance. This plans are similar to long term care insurance, but benefits are typically capped at one year.
- Hybrid policy. Coupling long term care insurance with life insurance is another cost savings policy. These hybrid plans typically have fixed premiums which can prevent rate hikes.
- Long term care annuities. These annuities typically require a large upfront payment, but if you require long term insurance, they can reduce your overall cost than what you would spend on insurance premiums.
- Health savings accounts. If you have an eligible high-deductible insurance plan, these accounts allow you to put money aside, tax free, to cover medical costs including payment of long term care insurance premiums.
- Home equity. If you do not have any significant investments, it is important to remember that your home is still a valuable asset. Tapping into your home equity to pay for long term care may be a viable option.
- Retirement income. Depending on your cost of your long term care, your pension or social security income may be sufficient to pay for the care that you need.
- When you have exhausted your other options, the government can step in to pay for long term care. Medicaid however has very strict asset limitations and rules.
Long term care insurance is extremely expensive and costs are rising. The best planning requires looking at your options before you’re too old or no longer healthy. However, do not give up if long term care insurance is not for you. There are many planning techniques to protect your assets from the costs of long term care.