Advertisement
Long-Term Care Insurance

Alternatives to Long-Term Care Insurance

Certain Federal workers are facing a big hike in long-term care premiums. Stay calm and explore other options.

Federal employees and retirees who signed up for the Federal Long Term Care Insurance Program may experience a rise in their blood pressure over the next few weeks.

On November 1, their premiums will increase by an average of 83%, or more than $100 per month.

If you're one of the roughly 280,000 federal employees who enrolled in the plan (about 10% of the current federal workforce), you just watched your retirement budget collapse. And you're probably angry.

Advertisement - Article continues below

Rightfully so. You probably believed your premiums would be better controlled.

But let's give your blood pressure a chance to come down and talk about your options.

The program is offering you a few ways to go. You can lower your benefits and maintain your current premium amount. You can go halfway—increasing the premium by 40%, for example, and reduce your benefits proportionately. Or you can keep the benefits you signed up for and absorb the new premium.

But there are other options available as well—steps that can be taken outside of the federal program that might also work for you. It's important to remember, however, that everyone's situation is unique, and what works for one person may not work for another. Here are just a few options available:

Advertisement
Advertisement - Article continues below

You can buy a life insurance policy. There are myriad life insurance policies out there and this is just one example of how purchasing a policy can help you pay for long-term care. Premium payments can be made using a single premium or can be paid monthly or annually.

Advertisement - Article continues below

Once you need long-term care services, you are most likely approaching your mortality, so they're going to let you access either the entire amount or a partial amount of the death benefit. It just reduces the death benefit proportionately. So if, for example, you pass away after you've used half the benefit, your heirs will still get the other half tax-free. If you don't use it at all, they'll get the entire death benefit.

In most cases, once you've put that lump sum in, you'll never pay another premium.

You can use a fixed index annuity with an income rider for your long-term care fund. A fixed index annuity is designed, first and foremost, to help create a guaranteed stream of income for as long as you live. However, the idea in this instance is that you'll pay the annuity premium and let it sit and accumulate interest credits for a given amount of time. That annuity will also have an income rider, generally available at an additional cost. That rider may also increase your benefit base by a certain percentage each year, often known as a roll-up interest rate. The longer you delay the rider income, the more years you can enjoy the annual roll up.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

In 10 years, you can come back to that money and start drawing income.

It may be appealing for a person who might not be able to qualify for traditional long-term care insurance or someone who might not be able to get a life insurance policy, because there's no underwriting.

Putting money aside for long-term care isn't an easy decision for anyone. It's an expense we try to talk ourselves out of, saying: "Only 50% of people need care; maybe I'll die in my sleep."

But there are ways to fit that fund into your retirement plan. So stay calm, carry on and don't be afraid to get creative.

Ann Vanderslice is president and CEO of Retirement Planning Strategies. She holds a Registered Financial Consultant designation from the International Association of Registered Financial Consultants, is an Investment Adviser Representative and a licensed insurance professional.

Kim Franke-Folstad contributed to this article.

This is not a solicitation to sell, nor an offer to buy any security. Cabot Lodge Securities and CL Wealth Management LLC mutual funds are sold by prospectus only. You should consider the investment objectives, risks, charges and expenses of any product carefully before investing.

Mutual funds, Insurance products and Securities are offered through Cabot Lodge Securities LLC [CLS]. Member FINRA/SIPC. Advisory services offered through CL Wealth Management LLC [CLW].

60 Broad Street, Suite 3402, New York, NY 10004, 888.992.2268

Retirement Planning Strategies is not controlled by or a subsidiary of CLS or CLW.

About the Author

Ann Vanderslice, RFC, Investment Adviser

President and CEO, Retirement Planning Strategies

Ann Vanderslice, president and CEO of Retirement Planning Strategies, specializes in helping federal employees understand and maximize the value of their benefits and plan for retirement. Vanderslice holds the Registered Financial Consultant designation from the International Association of Registered Financial Consultants. She is the author of "FedTelligence 2.0: The Ultimate Guide to Mastering Your Federal Benefits."

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

Americans are facing a long list of tax changes for the 2020 tax year...and it's never too early to start thinking about next year's return.
June 22, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020

Recommended

Applying for Disability Benefits During a Global Pandemic
insurance

Applying for Disability Benefits During a Global Pandemic

It can take months or even years to get approved for Social Security Disability Insurance (SSDI) benefits in the best of times. Needless to say, now i…
June 24, 2020
Finding Affordable Health Care Now
insurance

Finding Affordable Health Care Now

The pandemic has caused millions of people to lose their jobs — and their health coverage. Here’s a guide to finding affordable insurance.
June 4, 2020
Health Insurance Options Exist for the Newly Unemployed
insurance

Health Insurance Options Exist for the Newly Unemployed

Special enrollment periods for Obamacare plans and expanded Medicaid coverage will help people who are suddenly out of work because of the coronavirus…
April 17, 2020
10 Things You Must Know About Filing for Unemployment Benefits
unemployment

10 Things You Must Know About Filing for Unemployment Benefits

Unemployment insurance is a joint state and federal program that provides those out of work with temporary yet steady cash to help them financially. I…
April 16, 2020