At the age of 65, over 70% of individuals are likely to require long-term care. It’s crucial to budget for the high cost of care, which can reach hundreds of thousands of dollars annually.
Investing in long-term care insurance can help you budget for future care expenses. This insurance can help cover the costs of nursing homes, assisted living facilities, in-home caregivers, and other aging-related expenses. But, at 65, does it still make sense to purchase long-term care insurance? After consulting with experts, we discovered that long-term care insurance is still beneficial for individuals over 65.
Here are six reasons why experts recommend purchasing long-term care insurance at age 65:
1. The costs of care are substantial
Long-term care can be costly. In fact, “the cost of care can be up to $10,000 per month for care in a nursing home, some more, some less depending on the city and state the client receives care in,” explains Corey Rieck MBA, CLTC, president and founder of The Long-Term Care Planning Group, a firm that assists consumers in planning for their long-term care needs.
Long-term care insurance premiums can be far more than the actual cost of treatment, especially for high-priced nursing homes. “Ultimately, one year’s annual premium will be less than one month’s care so there can be excellent financial leverage,” Rieck says.
2. Medicare was not designed to fund long-term care
Some consumers anticipate Medicare to cover their long-term care costs. However, “long-term care insurance is important to consider at this time as Medicare does not pay for long-term, custodial care,” says Bill Comfort, CLTC, director of training at Certification for Long-term Care, an education business that qualifies long-term care insurance brokers.
Long-term care insurance is the only option for covering care costs, unless you prioritize personal assets. “Nothing pays for LTC until the client has spent down to a certain minimum asset and income levels and then they may qualify for that state’s Medicaid system according to that state’s rules,” Rieck said.
3. Long-term care insurance protects your loved ones
Long-term care insurance isn’t only for you. It can safeguard your loved ones.
“The true protection that you get from a long-term care plan is to protect the family,” says Keith Bercun, regional account director for OneAmerica, a financial services company specializing in retirement and long-term care planning.
Many people rely on family members to provide care. But that isn’t always the greatest strategy. “Everyone equates long-term care insurance with asset protection. What it genuinely does is safeguard your children from entirely uprooting their lives and becoming caregivers,” Bercun explains.
4. Premiums and payment choices may become more complex later
“LTC insurance premiums are based on your age at the time of application, and those premiums increase dramatically for people who start after 65,” said Comfort. However, if you wait to apply, you may face other payment issues in addition to high rates. Furthermore, Comfort cautions that “premium payment options may become limited after age 65 as some companies require more expensive 10-year (or shorter) payment plans starting at age 66.”
5. Long-term care insurance premiums may be tax-deductible
“Not everyone turning 65 is retiring, either,” Comfort notes. “If they are self-employed or perhaps are semi-retired but continuing to do independent consulting work, a portion of qualified LTC insurance premiums may even be deductible as a business expense.”
Furthermore, long-term care insurance tax deductions may not be limited to self-employment. It’s crucial to understand the 2023 and 2024 long-term care insurance tax deduction restrictions based on age.
6. Long-term care insurance can allow you to age at home
Long-term care insurance pays for more than simply nursing homes and assisted living facilities.It can assist you in aging at home. “The coverage could provide more options than just nursing home care,” says Steve Azoury, ChFC, the owner of Azoury Financial, a financial planning firm. “While buying long-term care insurance at 65 years old may be more expensive, it may be necessary in order to help obtain home health care services as you age.”