I run into many clients that are under the impression that Medicare covers ALL medical-related expenses. Unfortunately, this is not true. Medicare and Medicare coverages do not pay for extended Long-Term Care. However, on a short-term basis, Medicare will cover skilled care in a facility and home health care services (typically 100 days or less of care).
What happens after 100 days? Assuming that the beneficiary does not qualify for state aid or Medicaid, the bills go to you – the beneficiary. So how does one pay for these expensive medical bills?
Long-term care coverage is one area of the senior market that is in upheaval. Traditional long-term care policies had been the go-to standard to protect against the cost of an LTC stay. These policies pay a specified dollar amount per day for a specific duration of time. I’m here to go on the record: traditional long-term care policies are dead. Yes, you read that correctly – an insurance guy said traditional LTC policies are dead. What is my evidence? Glad you asked.
The late 1990s to early 2000s were the heyday of the traditional LTC policy. Two decades ago, close to 40 insurers were issuing between 500,000 – 750,000 conventional LTC policies. Today, there are only 5-6 carriers that write the traditional coverage, and there were less than 60,000 policies issued in 2018 (National Association of Insurance Commissioners, 2016 rev. Oct 2020). Traditional long-term care coverage is expensive and only pays if you use it. As the years have gone on, these policies have fallen to the wayside, and newer, better options are hitting the market.
Hybrid policies are increasingly becoming a better solution for LTC coverage. A hybrid policy leverages the use of a life insurance policy’s death benefit or annuities to provide long-term care benefits.
With a traditional LTC policy, it is a use-it-or-lose-it scenario. If one does not use the LTC policy over their lifetime, they have essentially paid out all those premium dollars with no benefit to them. The hybrid LTC solves this problem by paying a death benefit if the beneficiary does not claim the LTC benefits.
Additionally, most traditional LTC policies are paid for with a monthly or yearly premium; this cost continues until you die. In contrast, a hybrid policy’s cost can be paid for in a lump sum or spread out over a specified number of years.
If you are considering a LTC policy let Senior Legacy Partners help. We partner with all the top carriers in the nation that offer hybrid LTC policies. So, if you are in the market for a LTC solution we can independently shop the market to find the best solution for you as an individual.