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Dear Toni:
Recently my 66-year-old husband had a stroke leaving him unable to take care of himself. Because he is not working fulltime, he has qualified for Medicare Part B with a Medicare Supplement.
My husband, Joe needs 24-hour care which is going to cost over $7,300 a month. Our savings and his 401K pays for Joe’s needs and I have had to go back to work to pay our bills.
Can he apply for a long-term care policy since he now has a serious health issue which can keep him from qualifying for a policy?
Thank you for all you do to help us understand these complicated issues…
Kathy a Pearland reader.
Hello Kathy:
Sad to say, Joe will not qualify for a traditional long-term care policy, but I have good news!
Congress passed a law on January 10th, 2010 making distributions from life insurance and annuities tax-free when used to pay nursing home costs and making way for long term care needs affordable. This law is called the Pension Protection Act (PPA).
There are new options for baby boomers that have waited to apply for a traditional long term care policy because the premium is unaffordable and not in their retirement budget or because of health situations they cannot qualify.
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 believe 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 every day 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 or cannot qualify because of health issues.
And so, life insurance and annuity policies with long term care riders were developed to help those who wanted different options for a long term care situation.
Below are different ways to solve your long-term care retirement needs:
- Hybrid Life and Annuity Policies: Many life/annuity insurance policies have a provision if you have a long-term care need; you can receive a certain amount of long term care needs with your life/annuity policy’s face amount. These policies include accelerated benefits with chronic, critical, or terminal illness benefits to assist in a long-term care need. *They are not considered a traditional long term care policy. One should look at all of your long-term care insurance options.*
- Veterans Aid and Attendance Benefits: The VA can help Veterans with Long Term Care issues. There is over $20 Billion dollars available for long term care pension money just waiting for Veterans to apply for their Aid and Attendance benefits. You need to have a Long-Term Care issue to qualify. (you must be a veteran to receive benefits and both you and your spouse could qualify.)
- Medicaid: Check to see if you can qualify for Medicaid. Many must “spend down” to qualify.
