Alternatives To Long Term Care Insurance

Here are alternatives to long term care insurance.

1. Shop Long Term Care Insurance Policies 

Only once you know the cost of your long term care options can search alternative means if the plans are not affordable. However, you might be surprised at what you can afford. 

Most financial experts will advise that if you can afford a long term care insurance policy, then you should buy one. 

If a traditional LTC policy is out of reach financially, then perhaps one of the following alternatives to term care insurance may be a better option. 

2. Add a LTC Rider To a Life Insurance Policy

Senior life insurance policies are easier to qualify for and have options to attach ‘Riders’ that extend the payouts of your policy. 

By adding a long term care rider to a whole life insurance policy, you gain the ability to access your life insurance funds while living (living benefits) if you were to need ongoing long term care.  

A life insurance policy with living benefits is an excellent alternative to long term care insurance.

With a traditional LTC policy, you only receive benefits if you need long term care. If you do not use your benefits, the money that you paid in premiums over the years is then lost. However, if you add an LTC rider to an insurance policy and never use your living benefits, then the funds are left behind for your beneficiaries as a death benefit. 

A long term care rider can also be added to a retirement annuity and works in the same manner. 

You can explore your options for adding a long term care rider to an insurance policy or an annuity by filling out the form on your screen. One of our independent agents will help you shop and compare your various options.  

3. Consider a Health Savings Account (HSA)

Though the health insurance market is continually shifting, health savings accounts are an easy way to make your dollar stretch further. 

HSA accounts are tax-protected vehicles that allow you to pay for medical expenses through tax-deductible contributions. In other words, HSA accounts stretch the value of your hard-earned dollars by allowing you to pay for your medical expenses through a tax-deductible savings account. There are limits on how much you can contribute to an HSA. The details of which usually pertain to your age. 

You can enroll in an HSA plan in a few different ways. Most people will enroll in the open marketplace, while others will be given HSA opportunities through their employer. Most HSA funds roll over unused funds into the following year, which further stretches your dollar.

4. Self-fund through personal savings

If you’ve exhausted the other alternatives to long term care insurance, the last remaining option is to self-fund. Though it may seem impossible, thorough planning can allow you to successfully cash flow your long term care expenses. 

To successfully cash flow your future medical expenses, you must thoroughly plan and prepare in advance. Waiting until you need the funds will not work. Saving money before you need it allows your money to grow with compounding interest. 

Albert Einstein famously said: “Compound interest is the 8th wonder of the world.” 

Self-funding long term care expenses is possible if you start saving early enough. A study by the Department of health and human services suggests that setting aside $70,000 of your retirement funds for LTC expenses is adequate for most Americans.   


Explore Long Term Care Insurance Alternatives

5. Medicare and Medicaid 

When you’ve run out of options for paying for long term care, turning to the government is the last option. Medicare and Medicaid both provide benefits for long term care expenses; however, the benefits are minimal and extremely limited. 

Many people assume incorrectly that Medicare and Medicaid will pay for long term care. These people and are typically shocked to find out how little these government programs contribute. 

If you’re new to Medicare, it helps to know that Original Medicare only covers up to 100 days of long term care costs. And common needs such as in-home custodial care are not covered. One hundred days is far below the average time one might need long term care. After 100 days, you exhaust your Medicare benefits and are responsible for the full costs.   

  • The average number of years women will need long-term care – 2.5 years 
  • The average number of years men will need long-term care – 1.5 years 
  • Percentage of people needing more than five years of long term care – 14%

Medicaid, on the other hand, does pay for ongoing long term care costs. However, not everyone qualifies for Medicaid. And being dependent on Medicaid is not a position anyone wants to be. 

To be eligible for Medicaid assistance, a person must first deplete all of their resources and assets. Typically you can’t have more than $2000 in assets to be eligible for assistance. In other words, only once you’ve liquidated all your assets will Medicaid pay for long term care. 

It’s also worth noting that not all facilities accept Medicaid patients. And you may have to relocate where you live to receive care. 

Lastly, the main drawback of relying on Medicaid as an alternative to long term care insurance is that only traditional nursing homes are covered. The most common type of long term care takes place in the home and is known as ‘Personal Care.’ Medicaid does not include coverage for this type of care. Relying on Medicare and Medicaid to pay for long term care expenses should be a last resort. 

Final Thoughts On Alternatives To Long Term Care Insurance

Finding an alternative to long term care insurance is possible through the options discussed above. While a traditional LTC policy would be ideal, your finances, health, and age may prevent you from obtaining coverage. In these instances, you can still protect your health and your finances by exploring these long term care alternatives.  

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