Multiple studies suggest that women often pay more for similar products and services, including the likes of personal care products, and dry cleaning services. This ‘woman’s tax’ situation is also evident when spouses try to purchase LTC insurance. In some situations where a couple is buying LTC, we have seen the wife’s premiums near triple that of the husband, even given that the two are of comparable age and have proximate health status. That certainly sparks some shock, but as you’ll see shortly in this post, there are various things women can do to combat the often high costs of long-term care coverage.
Why are women paying more for LTC Insurance coverage?
According to the U.S Department of Health and Human Services, over half of all Americans over the age of 65 will need daily care as they age. Total long-term care expenses average at $91,000 for men and double that amount for women. Why? Partly because American women are living longer than men. Women also tend to have a higher risk of suffering from chronic illnesses such as depression that can make long term care necessary. For instance, two-thirds of Americans suffering from Alzheimer’s happen to be women.
LTC shopping tips that women can use to keep costs down
Below are some easy tips that women can leverage to keep costs down:
- Talk to a financial advisor – talking to a financial adviser about your options is one great way to go about it. Make sure you lay out your financial goals, concerns, as well as future needs. With this information, your advisor should be able to formulate an appropriate course of action. Based on your requirements, and your current situation, an independent advisor (who does not sell insurance) will determine whether long term care is really the answer for you. If insurance is the answer, you can either shop online for the best LTC plans or request your advisor to recommend a particular company.
- Minimize risk of premium hikes – traditional long term care often is subject to premium increases. However, you can minimize that risk by buying a larger daily benefit with a lower CLA (Cost of Living Adjustment).
- Consider shared-care policies – this is a great option for married couples who are looking to buy long term care insurance. It potentially reduces the gender differential on the coverage costs.
- Open a HSA (Health Savings Account) – tax-exempted HSA dollars are an ideal way to purchase long term care insurance premiums. However, keep in mind that you need coverage from a ‘high-deductible’ health insurance policy to be able to open a HSA.
- Choose a hybrid long term care plan – another great strategy is to purchase a hybrid long term care plan, where you have to pay a simple lump sum premium thus ruling out any chance of rate increases. If you never need LTC services, then your coverage will be paid out to your beneficiaries in the form of a death benefit upon your demise, which makes this a win-win scenario. The main trade-off here, though, is that you have to pay more in premiums.
- Plan early – insurance companies are increasingly conservative, rejecting more policy applications due to negative medical histories. It’s possible to be rejected for LTC coverage just because you were rejected by another company. The earlier you plan for and pay for long term care insurance, the less costly it’s going to be, and the more options you’ll have in the future.
With these few tips, women can minimize their LTC coverage expenses, and increase their variety of choice as well.
