Alternatives to Traditional Long-Term Care Insurance

Purchasing long-term care insurance (LTCI) is one method to help prepare for future healthcare needs. However, the costs of premiums can be high, and not everyone qualifies for this type of insurance. Therefore, understanding alternatives to LTCI that may be suitable and offer similar benefits may be essential.

1. Self-Insuring

Self-insuring involves setting aside funds specifically for potential long-term care (LTC) needs in the future. By investing and diligently saving, individuals can build a sizable nest egg to cover LTC expenses. However, financial discipline and consistent saving are necessary for this strategy to be effective.

2. Annuities with LTC riders

Annuities are also an alternative to LTCI. They provide income in retirement and can be structured to increase payouts if LTC is needed. The key aspect is the LTC rider, an additional feature that offers financial benefits if the annuitant requires LTC. To understand how LTC riders work, visit with a financial or insurance professional before purchasing an annuity and rider.

3. Life insurance with LTC riders

Like annuities, some life insurance policies can also be purchased with added LTC riders. With this rider, the death benefit provides monies to cover LTC. Upon the policy owner’s death, any remaining death benefit will be distributed to the beneficiaries.

4. Health Savings Account (HSA)

HSAs enable individuals with high-deductible health plans to save and invest money for future healthcare costs tax-free. HSA funds can be used to pay for numerous qualified medical expenses, including LTC, making them a viable alternative to LTCI.

5. Medicaid

Medicaid, a joint federal and state program, provides health coverage to individuals with low incomes, including low-income adults, children, pregnant women, elderly adults, and those with disabilities. While Medicaid doesn’t often cover LTC while living at home, it does often cover care in a nursing home for those who qualify.

However, with the recent cuts to Medicaid not yet fully known, this avenue for LTC may not be available in the future.

In conclusion

LTCI is one option to pay for LTC. There are numerous alternatives. It’s essential to conduct thorough research, understand personal needs and circumstances, and, preferably, consult a financial or insurance professional to gain a deeper understanding of long-term care insurance and future care expenses. With strategic planning, it’s possible to find a solution that offers confidence in your plan and financial independence for the future.

SWG4647488-0725a Disclosure: This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

In addition, Wealth Planning Experts specializes in providing strategies and guidance for those seeking a better retirement lifestyle. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!