Long Term Care Planning: What Every Texan Needs to Know

Here's a statistic that stops most people cold: 70% of Americans who reach age 65 will need some form of long term care before they die. And the average duration of care is nearly 3 years.

In Texas, the average cost of a private room in a nursing home is over $6,000 per month. Assisted living runs $3,500–$5,000 per month. Even home health aide services average $25–$30 per hour.

Do the math: three years of nursing home care in Houston could cost $200,000 or more. That's money that would otherwise go to your spouse, your children, or your retirement.

Long term care refers to assistance with activities of daily living (ADLs) when you can no longer perform them independently. The six ADLs are:

1. Bathing
2. Dressing
3. Eating
4. Transferring (moving from bed to chair)
5. Toileting
6. Continence

Most long term care insurance policies pay benefits when you can no longer perform 2 of these 6 activities, or when you have a severe cognitive impairment like Alzheimer's disease.

This is the biggest misconception I encounter. Many people assume Medicare will cover long term care costs. It won't — at least not in any meaningful way.

Medicare covers skilled nursing facility care only after a qualifying hospital stay of at least 3 days, and only for a limited time:

• Days 1–20: Medicare pays 100%
• Days 21–100: You pay a daily copay (over $190/day in 2024)
• Day 101+: You pay 100%

After 100 days, you're on your own. Medicaid will cover long term care costs, but only after you've spent down virtually all your assets.

Option 1: Self-Insure Pay out of pocket. This works if you have $300,000+ in liquid assets you're willing to dedicate to potential care costs. Most people don't.

Option 2: Traditional Long Term Care Insurance A standalone LTC policy that pays a daily or monthly benefit for qualifying care. Premiums can increase over time, which is a concern for many people on fixed incomes.

Option 3: Hybrid Life/LTC Insurance This is what I recommend most often. A single policy that combines a life insurance death benefit with long term care coverage. If you need care, the policy pays for it. If you don't, your heirs receive the death benefit. Either way, your premium is never wasted.

Long term care insurance is medically underwritten. If you wait until you have health problems, you may not qualify — or you'll pay significantly higher premiums.

The sweet spot for purchasing LTC coverage is typically ages 50–65. Premiums are lower, and you're more likely to qualify for preferred health rates.

A 58-year-old Houston couple in good health recently came to me concerned about protecting their retirement savings. We set up a hybrid life/LTC policy for each of them. Their combined premium was less than $400/month.

Each policy provides:

• $300,000 in long term care benefits
• A $150,000 death benefit if care is never needed
• Premiums that can never increase

For less than a car payment each, they protected over $600,000 in potential care costs.

Long term care is not a question of if — it's a question of when and how much. The families I've seen handle it best are the ones who planned ahead, while they were still healthy and had options.

Don't wait until a health event forces your hand. Call me at (713) 927-5969 or contact me online for a free long term care planning review.

Glenn Hubbard | Independent Life Insurance Broker | Houston, TX | TX License #824845