Long-Term Care Insurance After the Election
IRS Finally Issues Final Inherited IRA Rules: What You Need to Know Now
After four years of confusion, the IRS has released final rules for inherited IRAs—and they’re more complex than ever. Are you prepared for the new requirements?
Published December 23, 2024
70% Need Long-Term Care, But Only 3% Have Coverage: Here’s What You Must Know
Would you go without homeowner’s insurance if there was a 70% chance of a fire? Then why are 97% of Americans unprotected against long-term care costs?
Navigating long-term care insurance decisions has never been more critical—and the challenges are intensifying following recent political shifts. With rising federal deficits and unsustainable government debt, senior care likely won’t be a priority for the current administration, meaning Americans must find alternative ways to fund this essential care.
The statistics are stark: an estimated 70% of people over 65 will need long-term care, yet only 3-4% have insurance coverage to help with costs.
The Reality Check: A Personal Story
Consider this scenario: A neighbor’s house caught fire while they vacationed. Before anyone realized what was happening, the blaze had spread so extensively they couldn’t live in their home for almost a year. Fortunately, homeowner’s insurance covered rebuilding costs—but house fires are relatively rare events.
The question becomes: If you wouldn’t risk going without homeowner’s insurance for a rare event, why would you go unprotected against something with a 70% probability of occurring?
The Caregiving Reality
As a former RN who helped care for her father, the author can attest to the immense difficulty of providing 24-hour care. Expecting spouses, children, or communities to handle long-term caregiving is increasingly unrealistic as families become more dispersed and community support diminishes.
The emotional toll is devastating. Caring for someone day in and day out leads to exhaustion, frustration, and often guilt—a situation no family should face without a proper plan.
Three Strategic Approaches to Long-Term Care Coverage
No single solution works for everyone, making it essential to work with an objective, knowledgeable broker or Certified Financial Planner (CFP®) to explore different options.
- Pay-As-You-Go Coverage
Pros: Provides maximum coverage for less upfront cost Cons: Risk of rising premiums over time
Many policyholders from the 1980s and 90s now face premium increases of double or triple their original payments. This creates serious concerns as people reach claim ages while living on fixed incomes already strained by inflation.
- Hybrid Policies
How they work: Combine life insurance with long-term care benefits
Benefits:
- Guaranteed death benefit regardless of care needs
- Access to approximately three times your premium payments if long-term care becomes necessary
- Peace of mind through dual-purpose coverage
- Permanent Life Insurance with Riders
Structure: Life insurance policies with critical or chronic illness riders Advantage: Death benefit can be accessed while alive to cover long-term care expenses Security: As long as premiums are paid, death benefit protection remains intact
Why Planning Can’t Wait
The current political and economic landscape makes long-term care planning more urgent than ever. With government support likely diminishing and costs continuing to rise, families must take proactive steps to protect themselves.
Long-term care insurance decisions may seem complicated, but they’re absolutely vital. The key is understanding that this isn’t just about insurance—it’s about preserving family relationships, maintaining dignity, and ensuring quality care when you need it most.
The Cost of Waiting
Many families discover the harsh reality of long-term care costs only when crisis strikes. At that point, options become limited and expensive. Medicare covers only limited skilled nursing care, and Medicaid requires spending down assets to poverty levels before providing assistance.
The choice is clear: Plan proactively with insurance coverage, or risk depleting life savings and burdening family members with both financial stress and caregiving responsibilities.
Moving Forward
With careful planning and expert guidance, you can choose an approach that fits your specific needs and budget. The goal isn’t just protecting your assets, it’s ensuring you and your loved ones maintain independence, dignity, and family harmony when long-term care becomes necessary.
Read the full article on Forbes.com.