The last thing any one wants is to outspend their life savings; that’s why most of us spend so much time planning our retirement to the tee. When the need for long-term care strikes, many people aren’t prepared.
Why Plan for Long Term Care?
Planning for long term care is something that is often left out of retirement plans, either due to a lack of awareness or because the risk seems too far fetched. Unfortunately, it’s not that far fetched at all.
The risk that any American will need long term care is about 50%, and that gets bumped up to 70% once you reach age 65. Compare that to the risk of getting in a car accident, which is 1 in 240, according to a study done by the National Academy of Elder Law Attorneys, or the risk of experiencing a house fire, which is 1 in 1,200, the risk of long term care is extraordinarily high.
So given that the chances are so high, how do you protect yourself from this risk? Assuming you have assets that you would like to shield from the cost of health care during retirement, Long Term Care Insurance can provide a solution.
What is Long Term Care Insurance?
Long Term Care Insurance provides coverage for care received in a long term care setting. That can include a nursing home, assisted living facility, in-home care, and other settings like adult day care, as well. Care in these facilities can be extremely costly and can reach up to $100,000 a year.
Without insurance, you will either have to pay out of pocket, forgo facility care for care provided by a family member, or spend down your assets to qualify for Medicaid. None of those three options are ideal for anyone; they include financial and emotional stress, while Long Term Care Insurance often helps you avoid this type of problem.
Texas, like most states in the US, has a Long Term Care Insurance Partnership Program to help address the growing need for long term care. On top of your typical Long Term Care Insurance policy, with the Partnership Plan, you are also eligible for another benefit: a Medicaid spend down waiver. What this means is that if you exhaust all of your benefits from your policy and still need care, you won’t be forced to spend all of your assets to qualify for Medicaid.
How Does the Partnership Program Help?
These programs exist to encourage personal responsibility amongst state residents and reduce the burden on the state. If more people purchase Long Term Care Insurance Partnership Plans, that is a significantly lesser amount that the state will be forced to pay for people’s care. It also helps ensure you won’t be stuck between a rock and a hard place when it comes to paying for care, because you will have established a solid plan.
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