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While less than 10% of Americans have long-term care insurance, it has been widely recommended for people who fall between those who cannot pay for home health or assisted living, let alone nursing home care, and so must rely on Medicaid on the one hand and those who are able and willing to pay for these out of their savings and investments on the other.

Older policies come with the option of 3% and 5% inflation riders, a few cumulative.

Today almost no policies include an inflation rider. Rather, a policy is either for a pool of money or for a daily benefit, subject to often opaque contract requirements.

Before the onset of what is likely to be persistent and double-digit or near double-digit inflation, medical, including home health, assisted living and nursing home costs were rising about 5% per year over the low, relatively stable rate of inflation. Now they can be expected to rise more.

Without an inflation rider, is long-term care insurance worth it?

A hybrid policy based on an annuity might look like a possibility IF the annuity is tied to equities and you will not need to draw on the long-term care benefit for many years, until inflation is tamed. But read the policy carefully. Share it with your financial advisor and elder lawyer. These are the days of buyer beware.

 

Elder law attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

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