Our generation gave us the Beatles and the Rolling Stones, now it’s about to give us retirement. And most people are not fully prepared.


You worked hard to plan for a comfortable retirement. You’ve worked your whole life for this moment


There’s one thing that you haven’t planned on – spending your life savings on long-term care services just isn’t on your to-do list.


However, as you age, you or your partner may need help with things you’ve always been able to do yourself – shopping for groceries, fixing meals, cleaning the house. You may also need help with personal services, like bathing, dressing or taking medications. One day you might even need an extended stay in a long-term care facility. The average length of stay in a nursing home is 835 days @ $300 per day, which is over $250,000. A private room can cost almost $150,000 per year.


If you end up needing long-term care services, costs like these can drain your retirement savings quickly, put stress on the lifestyle of the surviving spouse or partner and put a hole in your estate planning for your children and grandchildren.

How a long-term care insurance policy works

Most people purchase a Long Term Care policy because they “don’t want illness to control the family.” Having a Long Term Care policy may be a determinant of whether an individual will have a financially secure retirement.

Long-term care is needed when you can no longer take care of the Activities of Daily Living (ADL) – Bathing, Dressing, Eating, Toileting, Transferring, Continence or Cognitive Impairment. When 2 out of the 6 ADL’s or a Cognitive Impairment takes place, the benefits of the policy are triggered.

The policy will pay a Monthly Benefit for a specific duration or maximum dollar amount (policy limit) after a defined waiting period, during which time any costs for long-term care services are your responsibility. The policy may also have an option to keep up with inflation. All of these factors, plus the age and health of the applicant, will determine the cost of the policy.

You also have the option to choose how to receive policy benefits. A traditional reimbursement benefit is payable after satisfying your policy’s elimination period. Or you can elect to receive a cash with no elimination period to satisfy.

As long as you remain chronically ill and eligible for benefits, your policy will continue paying for covered long-term care services until your policy limit is reached.

Most health insurance covers things like hospital stays, medical procedures, doctors’ office visits, and prescription drugs. However, the cost of long-term services such as nursing home stays is generally not covered. Even Medicare will only cover short stays in nursing homes, or some in-home care, but only under specific conditions.

Long-term care insurance is designed to cover these types of expenses. In addition to nursing home stays, long-term care insurance can cover things like a home health aide to assist with bathing, dressing, or eating. Covered services vary by policy,

In addition, LTC policies generally cover the following:

  • Care in your home, such as skilled nursing care, occupational and physical therapy, and help with personal care.
  • Alzheimer’s care facilities
  • Assisted living facilities
  • Hospice and respite care services
  • Adult day care centers
  • Home modification — some policies cover things such as wheelchair ramps and grab bars to make your home more accessible

How much coverage you need is factored in with other income sources you might have. Unlike Medicare, which reduces your benefits based on your income, a Long Term Care policy pays out no matter how much money you make or have in your portfolio. It isn’t always necessary to obtain coverage that will pay for 100% of your long-term care costs — just the portion that your income (Social Security, pensions and other guaranteed income, income from savings and investments) may not be sufficient to cover. This is one of the most important things to keep in mind. Buying only the amount of coverage you need can save you a tremendous amount of money.

Stand-alone Long Term Care policies are the primary way to pay for care, but there are many other ways. You can get a rider on a Life Insurance policy that will allow you to use some of the cash or death benefits for Long Term Care costs. There are also hybrid Universal Life policies that offer investment, death benefit and Long Term Care coverage in one package.

For many retirees, long-term care insurance makes sense to safeguard against the high potential costs of nursing homes, assisted living, and in-home health services. Speak to an advisor to help you navigate through the Long Term Care landscape. Nobody’s legacy should be lost to long-term illness.


Ernie Schultz

Financial Advisor / Insurance Specialist

Forest Hills Financial Group

516 263-8461