High health literacy can help you succeed in long term care planning, whether you choose to self-insurance or purchase long term care insurance policies.
However, what exactly is it?
Understand the Role of Health Literacy
Health literacy is the ability of a person to obtain, process, understand, and apply health-related information and services to make sound decisions about the future. So how does this relate to self-insurance and long term care planning?
Although it is a major component, the reality is that only a handful of people are concerned about their health literacy. When you list down the worries and challenges that baby boomers face, you will immediately think that there are more pressing matters or more relevant issues to address.
Our question is this:
Is a high level of health literacy really that unimportant, especially for the baby boomers now?
To answer this question, we will be focusing on an aspect of long term care planning that greatly affects boomers, although they do not realize it: the role of health literacy in long term care planning and self-funding.
The Advantages of Having High Health Literacy
People with high health literacy benefit in two ways:
First, they get to have the security and independence in growing older because they know that their plans for self-insurance and long term care are sold enough to last them through the years.
Second, they get to save so much more money because they know what they need, where to get it, and how to reduce its costs.
As you can see, this can help you and other baby boomers struggling with the costs to take back the control of their future. High health literacy can help you find the answer to any questions you might have about self-insurance.
Finding Coverage and Funding for Long Term Care
One of the biggest advantages of high health literacy is this: you know what kind of care you need, and know where you can get the funds to pay for it.
For many baby boomers, the effective method is a long term care policy. They pay insurance companies a set amount of premiums for a certain time, and then once the health conditions kick in, these companies will pay for their expenses. Often, these carriers end up covering expenses that are more expensive than the cost of the policyholder’s insurance.
Another method—the one that we are also focusing on today—is self-insurance.
Get to Know Self-Insurance
What is it?
As the name implies, self-funding is a method wherein you rely on your assets, savings, and investments to sustain your lifestyle and care needs. Instead of relying on an insurance company to gather your funds and protect it from inflation, you rely on your own capabilities and resources.
Who needs it?
Generally, the people who need anything kind of funding for retirement, long term care, and healthcare are the baby boomers.
Why do people self-fund?
The most popular reason behind the risk of relying on your own estate is that people do not want to deal with insurance premiums. Instead of paying the amount to a company, they opt to manage the money on their own.
When is it effective?
Self-funding retirement and long term care is a tricky business. Experts have pointed out that if you have assets exceeding $2 million, then you can safely assume that you can cover the costs on your own.
Where can you get more information about self-funding?
Ideally, you should only get information from reliable websites with .gov or .org domain extensions. Two examples are Healthcare.gov and IRS.gov.
Moreover, you can also look into online forums, but remember to what you read with a grain of salt. Verify the claims you read before you take them as facts.
Lastly, you can also consult with a financial expert who will advise you if self-insurance is for you.
What Are Your Other Long Term Care Coverage Options?
Keep in mind that 52% of individuals turning 65 will develop a disability or health condition that will require extensive care. You have to find the method that suits you and your circumstances.
What we are trying to say here is this:
You have more chances of requiring long term care services that cost a fortune than the opposite. You need to find the coverage that works best for you.
Take the time to look at other options and see which applies better to you situation. Learn about the other methods like long term care insurance, and see how these policies can help you. To assist you in deciding, here is a post by ALTCP.org. It discusses the various risks of long term care policies and how to avoid them effectively. Take the time to examine each before deciding on the weapon against the substantial costs of care.