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Long Term Care Insurance: Real Stories

Sometimes understanding the ways in which long term care insurance (LTCI) can help in the future can feel very abstract— especially if you are trying to plan out care decades before you might come to need it. Listening to the stories of real people who have purchased, and in some cases used LTCI, can help provide a better perspective as you plan for your own future, so let’s explore some real case studies together:

We’ll start off with Marilyn, 80, insured through Mutual of Omaha who had chronic knee pain which turned out to be a meniscus tear and osteoarthritis. She started to receive physical therapy, but when the COVID-19 lockdowns started they ended abruptly and due to her ongoing condition, she unfortunately fell at home which resulted in needing a full-knee replacement. She had the surgery, but with her LTCI policy, was able to request at-home physical therapy and personal care instead of staying at an in-person rehabilitation facility. She was even able to extend her initial at-home care for an additional 6 weeks when it was assessed that she wasn’t progressing in the way her doctor hoped. This was all done through Mutual of Omaha, which her child accessed through their claims process since they held power of attorney. 

Next up, is a retired married couple around 60 years in age with an IRA and high pension that were looking for an annuity plan with high premiums but didn’t want to have to pull money from outside of their plans. To do this, they opted to take $200,000 from their IRA to buy a $240,000 plan (with 20% bonus) annuity. A required minimum distribution (RMD) over 10 years would be taxable at $24,000 a year. This moves IRA to non-taxable over the 10 years. $239,497 death benefit/LTC benefit and a lifetime rider for LTC insurance with a $86,220 LTC benefit for each owner for life. (Please note a minimum age of 59.5 is required to access the money without penalty.) This specific plan they chose means that they were able to transfer a portion of their qualified money that will then provide long term care coverage for them for life.

Finally, we’ll look at a case study of a Baygroup Insurance client who was a single individual looking for a plan. A woman, age 59, wanted to investigate long term care planning but was concerned about the cost of a premium. Her assets totaled $200,000 and once she hit 67, she could collect social security while still working if she desires. Her preference was to remain at home as long as possible should care be required down the road. She has one daughter who makes a substantial income but wouldn’t be able to take time off to provide care for her mother herself without losing income in the process. As a result, as a family they settled on splitting the cost of her mother’s LTCI policy together, which consists of a $200 per day benefit for in-home care and facility care to provide for most of the cost of care, 5 year benefit period, and with 3% compound inflation. This means that the mother was able to get affordable coverage, while assuring that the daughter can take on a supervisory care role instead of a hands-on role that would require her to give up her work and income, should the need for her mother’s care arise.

With all of these real life LTCI examples, it’s important to remember that long term care, in addition to helping with medical needs such as physical therapy, rehabilitation, etc., is also designed to help with activities of daily living (ADLs for short) such as bathing, dressing, eating, transferring (moving from one surface to another), toileting (using a commode) or continence, and cleaning, as they are not covered by Medicare or private health insurance. With LTCI, both medical and ADL care can be provided at home, an assisted living, a continuing care retirement community, or a nursing home, based on your preferences. Regardless of which location of care you choose the most important thing you can do for yourself and your loved ones is to ensure you have a plan in place for the future for protection. We hope these case studies help provide a better picture of what types of LTCI plans there are, as well as what coverage can do for you and your family. At Baygroup Insurance, we’re here to answer any questions you may have about what insurance options can work best for you personally at no obligation. Feel free to contact us at: http://www.baygroupinsurance.com/forms/contact-us or call us at 410-557-7907.