Your Savings and/or 401K Could Be Wiped Out By Long-Term Care Costs

Dear Toni:

Recently my 66 year old husband had a massive stroke leaving him unable to take care of himself. Because he is not working fulltime, he has qualified for Medicare with a Medicare Supplement.

Yesterday I was informed that Joe needs 24 hour care which is going to cost over $7,300 a month. Now our savings and his 401K will have to pay for Joe’s long term care. How can I apply for a long term care policy for Joe to help with some of these expenses?

A few months ago, you wrote about other options for long term care.  You mentioned policies with living benefits. Can you please explain what to do to find a long term care plan?    

Thank you for all you do to help us understand these complicated Medicare issues…

~ Sally from Clear Lake Area


Hello Sally:

We are noticing more long term care issues at the Toni Says office because many people are waiting until they are retiring past 65 to apply for a Traditional long term care policy and then the premium is unaffordable and not in their retirement budget.

What they have left to pay for a catastrophic event is their savings and/or 401K, which makes retiring a financial nightmare!

Boomers need to be aware that the cost of long term care is projected to rise from an average of $87,600 per year in 2016 to over $123,000 per year in 10 years and the estimated yearly cost to be $174,000 in 20 years.

Many baby boomers are not concerned with long term care planning because many feel they have enough in their 401K to pay for a catastrophic illness. They do not realize that in 20 years when their health is failing that their savings and/or 401K could be wiped out because they failed to do proper long term care planning.

There is light at the end of the tunnel because with 10,000 baby boomers turning 65 everyday for the next 15+ years, the insurance industry has designed new products for those concerned about long term care issues, who do not want to spend their hard-earned retirement dollars on a long term care policy they may never use.  And so life and annuity policies with living benefits were born.

Life insurance or annuity policy with accelerated benefit riders such as terminal, critical or chronic illness benefits or death benefits (tax free).  Many insurance companies are offering these living benefits because people want protection for a long term care need and if they never have that need they have coverage for death benefits.

Living benefit riders include:

  • Terminal Illness Rider: Insured has an illness or condition that is expected to result in death within 24 months or less.
  • Chronic Illness Rider:  Eligible insured is unable to perform 2 of the 6 activities of daily living (ADLs) or requires constant supervision to protect from threats to health or safety due to severe cognitive impairment.
  • Critical Illness Rider: Specific critical illness such as heart attack, stroke, invasive cancer and many more critical illnesses.

The face amount of the policy determines what the living benefits are based on and the severity of the condition will determine the percentage paid. Accelerated benefit riders are not a long term care policy.

Confused about Medicare and Social Security Workshop – Tuesday April 5th at 2:00 PM at the Toni Says office 10998 Wilcrest, Ste. 120, Houston, TX 77099. Seating is limited to 20. Please RSVP 832/519-8664.

Toni King is the author of the new Medicare Survival Guide® which is on sale on our website. For consultation regarding your Medicare needs or for a “Confused about Medicare” workshop or lunch and learn for your church or office, email Toni at “Ask Toni” or call 832/519-TONI (8664).

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