Long-term care is needed when a chronic medical condition or disability affects a person’s ability to perform everyday activities. As a part of the retirement planning process, we like to include long-term care as a point of consideration and discuss the option of long-term care insurance. But what is it, exactly, and how does it work? Here’s a quick overview.
What is it?
Regular health insurance does not pay for long-term care and Medicaid and Medicare may or may not help you get the level of care that you want. Long-term care insurance could cover the shortfall of costs left by Medicaid or Medicare.
Why should I consider it?
Long-term care can be expensive and Medicaid and Medicare limits you to living in facilities that accept their insurance. You’ll want to consider long-term care insurance if you want to ensure that you have options for the type of care you will receive. Plus, it could protect your savings because you won’t have to pay out-of-pocket.
What's the fine print?
There are a few lesser-known benefits to asset-based long-term care insurance that you might not be familiar with. Here are a couple to note:
- For some plans, if the insurance isn’t used, the cash value transfers to your heirs, tax-free via the death benefit.
- Care could start immediately, if approved. Check your plans details to know for sure.
- You can always change your mind after you have it but weigh this carefully, especially if you’ve already paid premiums for many years.
- Payment can be funded through required minimum distributions or different assets, depending on your situation.
Long-term care insurance is a great option for many people, but with uncertain prices and a qualification process, it’s important to do your research to find the right plan. As the financial advisor through CUSO Financial Services, L.P.* at 1st United Credit Union, Rahil Machiwalla can help you develop a retirement plan that helps meet your needs. He’s available to talk by phone or meet you at any 1st United branch. Schedule your appointment today.
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the Credit Union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to Credit Union members. Please consult a qualified tax advisor for specific tax advice.