Toni,
I applied for a long-term care policy but was denied due to having a pacemaker installed in January. The agent who presented the LTC plan suggested that I apply for cancer insurance to help with out-of-pocket costs in case I have cancer issues.
I had not applied for long-term care because I do not turn 65 until this October. Now I am discovering that waiting until I was older was not a good idea. Can you please explain the difference between cancer insurance and a long-term care insurance plan? Thank you.
— Leonard from Tampa, Florida
Leonard,
At the Toni Says offices, I am noticing an increase in issues with long-term care, because many are waiting until retirement, long past 65, to apply for a traditional long-term care policy. By then, the premium is unaffordable for their retirement budget, or they cannot qualify due to health issues.
It is important for Americans to begin searching for long-term care insurance when they are turning 50, so that the premiums are more affordable, and the plan can grow with at least a minimum of 3% compounded lifetime inflation factor.
The cost of nursing home care is projected to rise drastically from an average yearly cost of $115,000 in 2023 to more than $207,000 in 20 years. The average cost of assisted living, which is less expensive than nursing home care, is approximately $57,000 per year and is projected to rise in 20 years to about $103,000 per year. Yet most of us want to stay home, and the cost of home care is around $30/hour today. I cannot imagine what that cost will be in the future.
There is a major difference between a long-term care plan and cancer insurance. The insurance industry has designed different types of products for Americans who are concerned about long-term care and want to find a plan that is affordable or that they can be approved for by underwriting, which was the problem you experienced, Leonard.
Let me explain the various long-term care plan options and what a cancer insurance plan is.
Long-term care options
1. Traditional long-term care policy: The younger you are, the lower the premiums will be. Look for a long-term care policy while you are younger and in good health. An LTC plan is coverage for nursing home care, assisted living or care at home after a 30-, 60- or 90-day (or longer) deductible has been met. An LTC plan is the top-of-the-line for long-term care planning.
2. Life and annuity policies: Many life/annuity insurance policies have a provision, or rider, for long-term care. These plans may not meet your future LTC needs like a traditional LTC policy would.
3. Veteran benefits for long-term care, “Aid and Attendance” benefits: There are billions of VA pension dollars available for a long-term care for veterans who apply for their benefits. You must have a need for long-term care to qualify. Thank you to the VA for this great benefit for our veterans and spouses.
4. Medicaid: Those with too much in income and assets may not qualify for their state’s long-term care benefits through Medicaid.
Cancer insurance plan
A cancer plan will pay a lump sum amount when one is diagnosed with cancer. For example, for a specific monthly premium, a plan pays a set amount of $30,000. While a cancer plan is less expensive than an LTC policy, it does not offer the benefits of an LTC plan.
Readers, don’t put off until tomorrow what can be done while you’re still young-ish and healthy.
Toni King is an author and columnist on Medicare and health insurance issues. She spent more than 27 years as a top sales leader in the fields. For answers to Medicare questions, email info@tonisays.com or call (832) 519-8664.