ATA Members

Long Term Care Insurance

All of us probably know someone who had to go into a long term care facility -- a grandparent, a parent, an aunt, a friend. Maybe they had Alzheimer's or Dementia. Maybe they got into an accident. For whatever reason, they were no longer able to take care of themselves.

If they were close enough to you, you might even know how much it cost (anywhere from about $3,500 to $7,000+ / month for memory care). You might have experienced the long wait to get a spot, or the cost of paying for a private one. If you look around, you'll probably see a groundswell of of Baby Boomers who are going to be competing for those spaces -- at a much faster rate than facilities are being built. So if these spots are only going to get more expensive, how will you pay for it?

As part of the Alberta Teachers Association Voluntary Benefit program, Long Term Care Insurance works like this:

You pay a monthly premium now before you need it, and claim when you can no longer perform two or more Activities of Daily Living (feeding yourself, dressing, etc.) You get a monthly amount that goes toward your care for either a set period of time or for the rest of your life. And the cost? Even if you paid premiums for the next 40 years, they typically would be 1/3 of what you would pay by waiting and paying cash.

And what does that mean for you?

You can go out and live your life now -- while you're healthy and mobile -- knowing that down the road, the costs of care will be taken care of.

This Long Term Care Insurance is available to all teachers and retired teachers who are members of ATA and ARTA.

Question: What is the likelihood I'll actually need this insurance?

Answer: Higher than you think -- 720 in 1200 Canadians will need a Long Term Care facility. If that doesn't seem that high, compare it to the common things that people usually buy insurance for:

Question: How much could long term care in a facility cost?

Answer: It's tough to know right now, but consider these stats:

Right now there are about 490,000 seniors living in Alberta. And about 10,500 assisted living units. By 2025 -- less than 10 years away, it's expected that there will be 763,000 seniors living in Alberta -- a 64% increase. The average cost of an assisted living unit right now is about $2900 / month -- and that's for basic care, not memory care or other more expensive supports assisted living units are not being built at nearly the rate that the seniors population is growing.

What does all this mean? Low supply and high demand means that it's reasonable to foresee a dramatic rise in cost for long term care facilities.

Question: What does Long Term Care Insurance cost?

Answer: Rates will depend on your age, your gender, the waiting period before your claim starts (30 days, 90 days, etc.) and how long you want it to pay out.

As an example, a 60 year old female getting a $2,000 / month benefit might pay about $162 / month. If she went on claim 10 years later she would have paid about $19,400 in premiums. But if she stayed on claim for 5 years, the cost of care would be $120,000. She'd be getting back five times what she paid. And she'd have gotten her money back in the first 10 months.

Question: Why should I get this insurance?

Answer: Because it means that you'll have a big part of your "what if" covered. You'll be taking away a big unknown, and giving yourself the freedom to go out and enjoy more of your savings while you're still active!

As well, if you have parents who could be facing care in the future, this can even be one way that you can help them to pay for their care at a fraction of the cost -- preserving their cash flow and their estate.