One of the best ways I learn in life is through examples, whether experiencing them myself, or having friends/family go through and tell me about them. There are a lot of unknowns for young professionals, and it’s tough sometimes to know we’re on the right track. One such area is getting old. We likely have seen grandparents or parents go through the aging process, and we may or may not have been that involved. Right now in my family, my grandfather is going through the aging process, and was recently admitted to a memory care facility. It’s not cheap and I was curious how my family was taking care of that. My Mom graciously offered to share some of her knowledge and experience with me and my readers! Enjoy!

Young Money Finance’s Mom here to share about my family’s personal experience with Long Term Care Insurance (LTC). While everyone many not need this insurance, it is a way to help give yourself some peace of mind.

My parents bought LTC insurance when they were in their 50’s. They are in their early 80’s now and it has been quite helpful for them. My Dad was diagnosed with dementia several years ago. Thankfully, we were able to keep him at home for a long period of time after the diagnosis, but eventually we saw that he needed more constant supervision. We wanted my father to get the best care by workers who were trained to care for dementia patients and we were very happy to find one that was nearby where they lived. Because the facility is very nice, the monthly rate was expensive too. My parent’s forethought in buying LTC proved to have been a worthwhile investment as they didn’t have to pay for the whole care out of their own pockets.

While you may have regular health insurance right now, and when you’re older, it may become necessary for additional more full-time care, whether in your own home or in a nursing home. Your regular insurance plan probably won’t pay for that care. Medicare/Medicaid may have some coverage, but that’s not a guarantee what that would look like or for how long. Getting Long Term Care Insurance is an option to help cover those cost (which can range into the tens of thousands of dollars).

Here’s some helpful information that I learned about LTC insurance:

1. It can be used for care in your home, for assisted living, adult day care centers, and nursing homes.
2. The policy has an initial period where you pay out of pocket for an initial set period of time or a certain dollar amount.
3. Most policies have a maximum monthly amount that can be used.  We found that their policy covers about 80% of the monthly cost for the special memory care facility that we are using for Dad.­­
4. The facility’s billing cycle starts at the beginning of the month.  The reimbursement cycle for the LTC insurance is at the end of the month.  So this will affect your cash value management.
5. If the patient dies before the maximum amount of insurance has been used, then you will not get any money returned to you.

Here are some other options for preparing for old age:

1. Set up a separate account for savings/investing solely for old age care.  If you start in your 30’s, then you will be far ahead.  The advantage would be that if you didn’t need it later in life, then it could go into your inheritance.  But you would have to be very disciplined in your 30’s, 40’s, and 50’s in order to not to use that money for something else. Preferably you’ll do this in a HSA (health savings account), where your money will grow TAX FREE.
2. Purchase a hybrid life insurance/LTC insurance policy.  This allows you the option to use it for LTC expenses if needed or if you didn’t use it for LTC needs then it would be paid as a life insurance death benefit to your beneficiary when you die.  The disadvantage is that these hybrid policies often require a large initial payment ($75,000 to $125,000).

To find the right plan of action for preparing for old age, it is best to talk with a trusted financial advisor that knows more about your individual needs.  As the saying goes, “Getting old isn’t for sissies.”  Even though it may not be fun, it is best to start thinking ahead now while you are young. 

YMF Note: Huge thanks to Momma Money Finance for her insight! As I was researching this myself, it appears that as of late, many insurance companies are getting out of the LTC insurance business, due to the fact that we’re living longer, and requiring more care as we age. It’ll be interesting to see what this looks like for us as we continue to age. It probably doesn’t make sense for young professionals to purchase a LTC plan right now, but in the interim, I do recommend saving in a HSA if you have the option to!