Long-Term Care Policies Preserve Wealth: Advisers Recommend Insurance Policies, Special Savings Plans to Offsets Costs

By Hopkins, Marc | Black Enterprise, June 2006 | Go to article overview

Long-Term Care Policies Preserve Wealth: Advisers Recommend Insurance Policies, Special Savings Plans to Offsets Costs


Hopkins, Marc, Black Enterprise


When Leandra Ollie saw her sister rack up a $33,000 bill following a two-week hospital stay, she realized how the rising cost of healthcare could wreak havoc on household finances. "My sister was in her early 20s, still in grad school, and couldn't afford to pay the bill," she says. "As a result, I definitely know that if something happens to you suddenly, it can ruin any financial planning if you aren't covered."

A Harvard University study found that nearly half of all people who filed for bankruptcy in 2004 did so because of medical bills they couldn't pay. While health insurance is vital, it doesn't guarantee immunity from a medical-related financial crisis.

The challenge of paying medical debt is further complicated by the lag in wage increases as healthcare costs continue to rise, says Elise Gould, a health economist at the Economic Policy Institute. "For families barely making ends meet, unexpected healthcare costs of a few thousand dollars could put them over the edge," she says. Insurance premiums for employer-sponsored health plans increased 9.2% last year, while worker earnings went up only 2.8%.

To help cover unexpected medical costs, Ollie, 33, purchased long-term care insurance. For $88 a month, she's covered for extended hospital stays, nursing homes, assisted living, hospice, and home care visits.

Ollie, a federal government attorney who owns her home in Washington, D.C., asks, "What's the point of building assets and not protecting them?" She has about $55,000 in her thrift savings plan, a Roth IRA with $500, and mutual funds totaling $3,000. …

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