For many, it comes down to a question of independence. "LTC insurance is a reminder to the family" that the wealth-holder will take care of his or her own personal assistance needs if and when required, says Martin Shenkman, an estate planning attorney in Paramus, N.J. This, he says, allows family members to "still have a life and know that, by doing so, they aren't deserting the ill person."
Lowering Premiums
Nevertheless, no matter how prudent medical and LTC insurance may be, the rates are ballooning. "Rising premiums are one of the biggest concerns for our client base," reports Rose Greene, a financial planner in Santa Monica, Calif.
So much so, in fact, that Greene started her own insurance business-and she has a few suggestions for insurance shoppers. "For our high-net-worth clients, we recommend high deductible policies with HSA accounts," she says, referring to Health Savings Accounts.
High deductible policies have the lowest premiums, and the corresponding HSAs, which are nontaxable investment accounts, enable you to "accumulate additional money for retirement or qualified medical needs," says Dudley Barnes, a principal at Barnes Pettey Financial Advisors in Clarksdale, Miss.
Another advantage, says Barnes, is that these plans can actually slash expenses by "challenging the number of physician-ordered tests," since policyholders pay for them directly, until their deductibles are met. "Some physicians even discount their procedures when paid in cash," he notes.
Negotiating Insurance Rates
Those who are happy with their current policy can still wrangle a rate cut. "Most carriers will re-underwrite a policy at no cost," says Michael Burton, certified financial planner at Burton Group Financial Advisors in Austin, Texas. This reappraisal can lead to "more cost-effective offers," he says. "I've been surprised at the concessions large insurance companies will make to either gain a new customer or keep an existing policy on the books."
There are ways to save on LTC insurance, too, besides buying in early. For instance, family businesses can purchase coverage for the benefit of the owner and his or her family. "Most businesses can deduct the cost, and they don't have to offer this benefit to rank-and-file employees," affirms Paul Larrabee, regional sales director at Crump Insurance Services in Salt Lake City. "The tax deduction is very attractive to the business, and the owners take a permanent benefit from the business tax-free. If they make a claim, the benefits are not taxable either."
In many cases, LTC coverage can be funded from a tax-free annuity, says Larrabee. In addition, several life insurance products have an optional long-term-care rider.
Knowing When To Get Help
Sorting through these options and related issues might require consulting outside experts-whether insurance brokers, elder-care attorneys, patient advocates or even mediators. "Financial advisors should proactively establish relationships with those specialists who can best aid clients in their effort to be treated fairly," contends Michael Kay, president of Financial Focus, a financial planning group in Livingston, N.J.
Yet outside help doesn't come cheap. "Most medical-bill advocates charge patients a percentage of their savings," cautions Nicholas Newsad, a senior analyst at Health Inventures, a Broomfield, Colo.-based chain of surgical centers, and author of The Medical Bill Survival Guide. "I advise patients to educate themselves and get the best prices they can on their own before hiring an advocate."