By Mike Gibbons, RICP®
As a biotech professional, you know firsthand how expensive the medical industry can be. And you also know that maintaining your family’s health and well-being, both before and during retirement, is a top priority.
One of the most commonly overlooked aspects of a retirement plan is long-term care (LTC), defined as “a range of services and supports you may need to meet your personal care needs,” including both custodial and medically necessary care. (1) Considering 7 out of 10 people turning 65 this year will require LTC in their lifetimes (2) and that the average cost of care is between $43,000-$92,000 per year, (3) it’s critical to make sure you and your family have a plan.
Thankfully there are many options to consider when planning for LTC, including the LTC insurance benefit offered to the employees at Abbott Labs/AbbVie. But just because it’s offered doesn’t mean it’s the best option for you. Here are some things to think about as you consider LTC for your retirement plan.
Abbott/AbbVie Long-Term Care
The Abbott/AbbVie LTC benefit offers assistance to covered individuals who have an ongoing disability or illness that prevents them from caring for themselves. Under Abbott’s plan, participants are responsible for the full premium payments. The policy is offered under the Abbott Laboratories Health Care Plan and is available to the following employees:
Active employees who work 20+ hours a week
New hires
Retirees age 66 and up
Eligible dependents including spouses, domestic partners, parents, grandparents, and adult children
Pros
There are several benefits to enrolling in an employer plan, including consolidation of benefits and discounted premium rates. Since Abbott/AbbVie’s LTC is offered under the same umbrella as its healthcare plan, this can make the administration of your benefits more streamlined and convenient. Additionally, employer plans are considered group policies, and as such, they typically offer lower premiums than a policy you might obtain on your own.
Cons
Group plans, while less expensive per person, usually come with a smaller benefit selection, and since you are not the administrator of your plan, there is less flexibility and customization available. Typically employers will offer some form of subsidization toward the premium, but that is not the case with Abbott/AbbVie’s plan. You are responsible for the entire premium payment. This is an important point to consider as you weigh your options.
Other Long-Term Care Options
Before making a decision on Abbott’/AbbVie’s LTC plan, it’s important to consider other options, especially since there are rules and restrictions regarding the duplication of LTC benefits. Here are some common options to think about.
Traditional Long-Term Care Insurance
These policies are becoming more and more outdated as better options have been developed, but an individual LTC policy functions similarly to other types of insurance. You pay a premium in exchange for benefits if they are needed.
This type of policy would likely offer a more robust coverage selection than the policy offered through Abbott/AbbVie, but would probably cost more since it’s not covered by a group insurance discount. Traditional policies also have significant premium increases over the life of the plan.
Hybrid Insurance Policy
These policies have become increasingly popular in recent years since they do away with the use-it-or-lose-it character associated with traditional LTC insurance. With a hybrid policy, you will receive a benefit even if you don’t require LTC during your lifetime. You pay the premium, either as a lump sum or over the span of years. If you need LTC, the policy will pay the benefits as if it were a traditional policy. If you don’t need LTC, the policy will act like a life insurance policy and pay death benefits to your beneficiaries instead.
Life Insurance With a Long-Term Care Rider
This option is similar to a hybrid policy except that it functions as life insurance first and LTC insurance second. You pay the premiums on your policy and your beneficiaries will be guaranteed a death benefit. If you end up needing LTC, however, the cost of care will be covered by your death benefit. Any amount that is left after the LTC is covered will be given to your beneficiaries upon your passing.
Where to Find More Information
Whether you’re considering Abbott/AbbVie’s LTC benefit or you’d like to explore other options, Gibbons Financial Group is here to help. We can navigate the pros and cons of each course of action, so that you can feel confident and prepared as you transition to retirement. Call 224-419-5550 or email me at Mike@gibbonsfinancialgroup.com to schedule a complimentary consultation today.
About Mike
Michael J. Gibbons is founder and president of Gibbons Financial Group, an independent advisory firm providing custom-tailored financial planning and investment management services to pharmaceutical and healthcare professionals and their families. Mike has over 25 years of experience and spends a significant portion of his day working with pre-retirees and retirees, focusing on asset management, Social Security and pension planning, as well as retirement income preparation.
Mike has degrees in both business and psychology from Lake Forest College and currently holds his Retirement Income Certified Professional (RICP®) designation from the American College. Mike was named a Five Star Wealth Manager for 2016 and 2018* Mike is heavily involved in his community, having served on the Village of Gurnee Police Pension Board as a Community Volunteer and the St. Patrick’s Parish Financial Board. When he’s not working or volunteering, Mike loves playing golf and spending his time with his wife and children. To learn more about Mike and how he can help you, connect with him on LinkedIn, visit his website, and register for his free webinar, Retiring Early From Pharma, created specifically for professionals retiring from the pharmaceutical, biotechnology, and healthcare industries.
*Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2016/2018 Five Star Wealth Managers.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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(1) https://acl.gov/ltc/basic-needs/what-is-long-term-care
(2) https://acl.gov/ltc/basic-needs/how-much-care-will-you-need