Leaning Into Long-Term Care

One of the biggest differences in financial planning for us LGBTQ folks is long-term care insurance. The reason it's different is that many of us are going to be aging alone, or we are at risk of aging alone, partly because we didn't have kids. Now, that's changed for many younger people. But for a lot of older LGBTQ+ people, this whole issue of who's going to take care of us when we're older and possibly alone, you really want to plan for this. 

One of the best tools is long-term care insurance. However, there are two different kinds. There's the old-fashioned traditional insurance. This has become very expensive, difficult to get, and the rates are increasing. If you already have it, we typically want you to keep it. We will review those rate increases and what your options are. And one of the key things is that all of those options that they give you for your coverage changes, if you're not going to accept the increase in the costs, they're not of the same value. And we help you review that. 

If you're going to consider dropping a policy or one of those traditional policies, we want you to carefully consider that there are ways to do it, there's a nonforfeiture option where you get your benefits that you've paid for somehow credited, but somebody else is going to be relying on that policy to help you. They may want to consider, for example, that this is often the case with parents and children; the children want to pay those premiums to make sure that the policy is still there. So that's a big issue with the long-term care traditional.

The new policies are based on life insurance or a traditional fixed annuity. And then from that, you get your long-term care benefits. This solves all of the problems of the traditional long-term care insurance, where you had very difficult underwriting, you had these huge rate increases, and no cash value at all. And so you pay year after year after year, and you may never get a benefit. And yet, it can still get more expensive. I call it it's like the the timeshare of insurance in that use get started in it. There are just constant expenses, and you can't really get out of it without losing your benefits. Your timeshare, you may actually use this, you just keep paying, and you may never use it. So the new policies are where you put money into a life insurance policy or a fixed annuity. And there are no bills, no long-term care insurance premiums, your cash value that you've put into it may be 100% of the value of that contract. So that if you never use it, you can take your money back or it goes to named beneficiaries. But most importantly, there are no rate increases. Once you have it, you're done. And you don't have to worry about it. 

This is a huge benefit, it's really important to plan for long-term care. I'm going to take one step back. For those who are not familiar with this whole area of insurance, long-term care insurance is a separate kind of insurance that is not covered by Medicare or Medicaid. 

The issue here is what if you have these huge expenses, where you have to hire somebody to come in to take care of you $20 an hour, 8 hours a day, and could be 24 hours a day. 

What if you need to go into an assisted living facility?

Nothing will destroy a lifetime of retirement savings faster than these enormous expenses. 

One story I tell is I had had somebody come in once who had a policy. And I asked him, he was asking me actually, how this works. I explained to him that if you can't do two activities of daily living, which are like transferring, toileting, continence, feeding yourself, or if you have a cognitive impairment, you can hire help or go into an assisted living facility. And then that will trigger the benefits of the policy so that you can get reimbursed for those expenses, or it could be an indemnity where they just pay you what your benefit is. But then it occurred to me, in this case that if he was unable to do two activities of daily living or had a cognitive impairment, he wouldn't even be able to file a claim on his own. And so that's where we want to plan for this. We want to make sure somebody else knows about the policy or that there's going to be somebody to help you with these policies. 

And lastly, here's another true story. This is something I ask people what their plan is for long-term care ... think carefully about your answer. 

What is your plan for long-term care if you can't take care of yourself and have to hire someone? 

There is no bigger difference in the answer to this question than any other issue. I will get people when I say, "What about long term care?", they will sink back into the chair, you can see this facial expression, and they will say I will never go through this again, I will never put anybody through what I lived through with my mom or with my dad. It's overwhelming. They know what it's like.

You want to coordinate the caregiving, NOT to be the caregiver. 

On the other hand, I will ask that same innocent question, "What is your plan for long-term care?" and somebody will say, "Oh, you know, I'm pretty healthy. And I'm not that worried about it. And, you know, if I can't wipe my own butt, put me on a ship me out to sea, I'm done." And I know they have no clue what could be coming. 

So think about your answer ... are you sticking your head in the sand and like, it can't happen to you, or you think, Oh, if it gets to this stage where I can't do two activities of daily living, you know, I'm at that point, I don't want to live anymore. 

My experience is that that is not the case. You do not want to be older, vulnerable; you want the help, but you want to be able to afford it. And I'm gonna say this, of course, money we all know gives you some power, insurance gives you power. I see this all the time, if I go to a home health care agency, or an assisted living facility, and my client has this policy, oh, they want you, they know they're going to get paid. It is like having money. So that policy is power. 

Realistically, many of us are going to need help. We are living longer lives. And this is getting to be incredibly expensive. Some people say, "Well, I'm really healthy. I think I'm I don't have to worry about this." But that's because you're so healthy. You may live longer and actually be more likely, but somebody who's already in terrible shape has all sorts of health problems; they may pass away sooner and be less likely. 

Additional Resources:

The Long-Term Care Conundrum: A Comprehensive Guide to Your Options

SAGE/HRC Long-Term Care Equality Index (LEI) 2023 Report

Human Rights Campaign Healthcare Equality Index 2024

Disclosures

The guarantee of the annuity is backed by the claims-paying ability of the issuing insurance company. 

Although it is possible to have guaranteed income for life with a fixed annuity, there is no assurance that this income will keep up with inflation. There is a surrender charge imposed generally during the first 5 to 7 years or during the rate guarantee period.

Index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees, and features, and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an index annuity for its features, costs, risks, and how the variables are calculated.