The Wise and the Wary
Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
Long-term Care Insurance: What to Buy
A little homework will pay off
In some cases, the decision about whether or not to purchase long-term care insurance is easy to make. If your assets are below $250,000, or your current cash flow could not sustain the monthly premiums, consider forgoing coverage. On the flip side, if your assets are above $1.5 million, you might consider self-insuring.
If you have decided that purchasing a long-term care policy is right for you, here are some suggestions:
- Only consider carriers that are highly rated by A.M. Best and Company and similar ratings services. Check ratings at Insure.com. Top carriers include John Hancock, MetLife, and Genworth.
- Make sure your policy is “tax-qualified” for income tax deduction purposes.
- Choose an elimination period between 45 and 90 days for nursing home care. This is the period during which you pay out of pocket for the cost of care. This acts like a deductible—the higher the number of days you pay, the lower the premium. Choose a zero-day wait for home health care.
- Choose some mode of inflation protection. A standard desirable feature is compounded inflation at 5%.
- Choose a lifetime maximum benefit period of a minimum of two years.
- Make sure the contract is “guaranteed renewable” and that your premium payments are waived during any month when you’re drawing benefits.
- Make sure your contract is eligible for any “partnership” benefits offered by your state, which will enhance your Medicaid benefits.
- Above all, seek guidance from a fee-only planner who gains no benefit or commission from whatever product you choose. Minimize conflicts of interest as you minimize your costs.
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
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