Filed Under:Health Insurance, Ltci

An alternative to LTCI: Self-funding

There is a growing chorus claiming that it’s possible, and even preferable, to self-insure for long-term care expenses.
There is a growing chorus claiming that it’s possible, and even preferable, to self-insure for long-term care expenses.

One of the most important pieces of end-of-life planning for most clients is long-term care insurance. With Americans living longer and health care costs continually rising, long-term care can be a truly scary expense.

According to a study published by Yale University, a modest 5 percent annual increase in health care costs could mean that long-term care could run $400,000 per year 30 years from now. The average length of a long-term care situation is now four years, but there is reason to believe that advances in medicine might extend that for the next generation.

But this requires very long-term discipline. By the time he or she reaches the age of 75, that 25-year-old would have had to make 600 consecutive monthly payments of $53, despite illness, job loss, college tuition, or any other hardship. That’s easier said than done. Clients should assess their ability to make such regular payments realistically.

The self-insured don’t have to worry about claims being denied. It’s not hard to find horror stories from people who paid thousands in LTC premiums, over the course of decades, only to find their claims denied, or at least delayed. This is never an issue for the self-insured.

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Nichole Morford

Nichole Morford
Managing Editor

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