Long Term Care Insurance and Planning for LGBTQ People

Long term care is not a subject most of us look forward to discussing. Who wants to dwell on getting older or not being able to take care of ourselves and a partner? Many choose to ignore the situation until it’s too late, leaving their children to make related decisions. But for the majority of LGBTQ people who do not have kids, this is simply not an option.

Nevertheless, 52 percent of people turning age 65 will need some type of long term care services in their lifetimes. On average, women need two-and-a-half years of long-term care, while men average about a year less thank that. Some 14 percent of people will need care for more than five years. Options include nursing homes, assisted living, part-time in home care, or full-time in home care. The costs associated with these various options range from $18,000 to $215,000 annually — and they’re on the rise. In the year 2000, people in the U.S. spent approximately $30 billion on long-term care expenditures; by 2015 that number ballooned to $225 billion. In 2017, five days a week of adult day care costs over $18,000 a year, and an assisted living facility will set you back about $45,000 a year. When it comes to nursing homes, the median cost of a semi-private room is nearly $86,000 a year. For a private room, that number climbs to about $97,500. And if that private room is in Manhattan, you’re looking at an average cost of $215,770 a year. So how are you going to pay for that?

Long term care insurance (LTCI) covers many of the costs of a nursing home, assisted living, or in home care — expenses that aren’t covered by Medicare. You may also choose to look at LTCI as a way to ensure that you can afford the necessary care to stay in your home as long as possible. However, some LTCI Insurers have made policies harder to qualify for, while many companies no longer sell those types of policies at all, and — in all honesty — those that still provide LTCI are gambling the insured will let their policies lapse before they end up actually needing expensive care.

Make no mistake, this is big business: In the year 2014 alone, 129,000 long-term policies were sold, bringing the number of individuals with long term care insurance coverage to 7.25 million. And if you tallied up the total cost of the maximum potential benefits of all the long term care policies in force today, it would add up to $1.98 trillion dollars.

To add to the complication, most LTCI policies are “use it or lose it,” and while ending up in a long term care facility may not be something you look forward to, you probably also don’t want to pay for insurance that will never be used (for example, if you should pass on before needing care). However, there is an alternative that avoids some of this risk: life insurance with an LTC benefit. These types of plans tend to be more flexible and can have lower premiums. Some also offer coverage for care after a critical illness (like a heart attack or a stroke or during a terminal illness. And if you don’t end up needing care, you may be able to receive (or pass on) some of what you invested.

How do you decide if this kind of combination policy is right for you? First, consider whether you need life insurance: Do people depend on your earning capacity? If your loved ones can be self-sufficient without you, it may not be a necessity; however some people still invest in life insurance as a way of making sure that those left behind are not burdened with cost-related “final expenses” like funerals or burials. If you’re not sure about life insurance, you may want to consider separate policies so you won’t lose long term care benefits if you decide you no longer need life insurance.

If you’re wondering if a particular combination policy is right for you, consider whether the long term care component provides adequate funds to cover the costs above. If assisted living or home health care are part of your plans, make sure those are covered, and ask whether benefits will be adjusted for inflation. Make sure you can apply the tax benefits of paying for long term care to the expenses related to that part of the policy. And — as with any investment — check the company’s financial strength rating and speak with an advisor who has experience with these kinds of policies before making your purchase. In the future, you will be glad you did. 

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