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New and Better Ways to Plan for Long-Term Care



Do you have a long-term care plan? Retirement plan? Do your parents? Siblings? These are all questions each of us should be considering - here’s why.

Almost 70% of the population after the age of 65 can expect to need long-term care. Women, on average, need almost 4 years of care, and men just over 2.

Long-Term Care planning is not considered enough amongst our population. In fact, for most, it isn’t until we are at the brink of needing immediate long-term care (whether it be for ourselves or for someone we love) that we start to plan. Last minute planning is not the most effective way to plan for something this important and this expensive.

What is “Long-Term Care”?

Long-Term Care (LTC) is a variety of services and support that someone needs to meet their personal care needs. Long-term care provides assistance with basic tasks of everyday living, such as: eating, dressing, bathing, using the bathroom, and moving from point A to point B. This isn’t medical care, this is basic daily living.

Long-Term Care is a part of retirement planning, and despite common assumption, it is not covered by medicare.

How much does it cost?

The national average cost of a private room in a nursing home facility averages around $80,000-$100,000 per year. Home-health care, a scenario in which someone comes directly to your residence to provide basic care services, can cost $50,000 a year.

On average, any given individual needing Long-Term Care would require service for 3 years. That’s a total that could range anywhere around $150,000 to $300,000, depending on the type of care that is necessary, and where you live. And, if you and your spouse need care, double that number. The bottom line is, this is no small expense.

How the market is changing:

In traditional LTC policies, the policyholder pays a monthly premium to the insurance company and in exchange, the insurance company would pay for all or part of long-term care services if needed.

Traditional long-term care policies were the only option for a long time. In fact, in the 90’s, there were over 100 insurancers selling policies, but in recent years, has reduced to just 15. The number of policyholders with traditional policies hasn’t moved either- despite the increase in population of 55 and older (those who would actually need to use long-term care services). The common problems with traditional policies is that the expensive premiums can be raised by the insurance companies discretion, qualifications for LTC is difficult, and there are no death benefits to your policy- you either use it for long-term care or you lose it completely.


Adam Moeller, a 15 year licensed fiduciary and advisor of long-term care, says there are t wo issues that can disrupt a retirement plan. One, the stock market declining while having too much money at risk. Two, failing to plan for long-term care expenses. But he reassures, despite past traditional options for LTC planning, there are new strategies that are popping up to mitigate both of those risks and plan ahead of time.

The first decision to make when planning for LTC is whether you want to self-insure or transfer some of that risk to an insurance company. Most can not write that kind of check, and even if they did, it would put them at financial risk- so self-insure is not an option for the average individual.

Here are three modern options Moeller discusses:

  1. The Hybrid Policy

This type of policy is a combination of life insurance and long-term care coverage. This means, the client benefits from long-term care coverage if needed, or, as a death benefit.

He says you can pay monthly premiums, but most often, you’d pay a one-time lump sum premium. Upon your need of assistance in qualified LTC services, you can access your policy, as a tax-free reimbursement to yourself. And if you pass away without ever using your policy for LTC purposes, a full death benefit can pass tax-free to your beneficiaries.


The hybrid policy is typically the more expensive, but you pay knowing that whether you use it for your own LTC or not, your beneficiaries will still receive benefit.


Moeller also explains that if you only use part of your policy for LTC services and then pass away, the rest will still be provided to your family as a benefit.


Overall, a win-win situation, but paid for upfront.


  1. The Asset-Based Policy

This policy is another that can provide LTC coverage without the common risk of “wasting premiums”, Moeller explains. With this policy, there’s an option to use an old annuity or life insurance policy and do a rollover or 1035 exchange to start the new Asset-Based policy.

With this policy, there is still a win-win situation at hand; coverage for LTC purposes and benefit for beneficiaries. The difference, however, between this policy and the hybrid policy is that Asset-Based has separate values; an amount for LTC purposes and an amount for death benefit. You can not have both. Moeller further explains that if you do not use LTC with this policy, the premium can be reverted to the annuity or life insurance it originated from.

This policy is a good option for individuals that are more concerned with the LTC benefits rather than the death benefits.


  1. Fixed Index Annuity with optional LTC rider

An LTC rider is an attachment to a life insurance policy that accelerates death benefit to help pay for the costs of long-term care services. If you have an LTC rider, having a fixed indexed annuity, Moeller writes, some insurance carriers will double your monthly income payment for a specific period of time if you need LTC (permitted by requirements).

Of course, there is a cost to this, he further explains: usually, a 1% rider charge. He likes this policy because many people can qualify and there is “less stringent medical underwriting than a traditional long-term care policy”.

Another great characteristic of this policy is that it can benefit a couple on one annuity if you have a 401(k) or IRA. This way, you can get two benefits out of one plan.

Moeller concludes by urging individuals to get educated and get a plan taken care of now while one is still young and healthy. There are many options out there that are customizable, beyond the ones listed above.


Americare provides many different long-term, and short-term care options. If you or someone you know is looking for care options, talk to one of our eldercare advisors by calling 573-544-0756. We’re here to help.

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