In the summer of 2022, OPM announced the likelihood of higher premiums for federal workers who purchase a Federal Long Term Care Insurance policy (FLTCIP). Since healthcare costs are rapidly rising, it should come as no surprise that premiums for long-term care (LTC) insurance in the private sector are also increasing. That’s why it’s important to consider more affordable insurance alternatives that can cover at least some of these costs.
What Is Long-Term Care?
Long-term care is the assistance you need when you’re unable to perform daily living activities like dressing, bathing and using the bathroom. This type of non-medical, custodial care is provided in assisted living facilities and nursing homes, or by in-home health aides. Unless you’ve purchased long-term care (LTC) insurance, you’ll likely pay for these services out of pocket. Why? Because FEHB and Medicare do not cover non-medical custodial care.
Short-Term Care Insurance (STC)
Also known as convalescent insurance, STC policies typically cover in-home care, assisted living, and nursing homes for 12 months or less. Unlike expensive LTC policies that cover several years of care, STC insurance is highly affordable at an average premium of $100 to $125 per month. With short or no elimination periods, benefits kick in near-immediately when you’re unable to perform two of six daily living activities. This type of policy typically pays between $100 to $200 of STC costs per day.
“Also known as critical illness insurance, it’s worth looking into when you have a family history of the medical emergencies that it covers.”
Critical Care Insurance
Critical care insurance covers specific types of health emergencies like heart attack, stroke, cancer, coronary bypass and organ transplants. Since these types of illnesses can require non-medical care that’s not covered by your healthcare plan, a critical care policy can help lower your out-of-pocket expenses. Typically, you’ll receive a lump sum payment to cover out-of-pocket costs and premiums are highly affordable. Also known as critical illness insurance, it’s worth looking into when you have a family history of the medical emergencies that it covers.
Annuities With Long-Term Care Riders
There are a number of advantages to purchasing an annuity with a long-term care rider. It gives you a stream of guaranteed retirement income while the long-term care rider can be used tax-free to pay for long-term care in a nursing home. Even better, if it turns out that the insured did not need long-term care, policy beneficiaries can likely collect the accumulated value of the annuity.
Meet with an FRC® trained advisor to learn more about these and other insurance products that can help protect you from the high cost of unexpected health issues.
