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Should I Purchase AbbVie’s Long Term Care Insurance (LTCi) or Buy My Own? Thumbnail

Should I Purchase AbbVie’s Long Term Care Insurance (LTCi) or Buy My Own?


Before we review AbbVie’s plan and whether you should participate, let us review Long Term Care Insurance's purpose and its place in your financial plan. All insurance programs are simply a transfer of risk. Any time you are considering investing in an insurance plan, your first question should be “What is my risk exposure and is it large enough to transfer?”. It is no different for your Long-Term Care Insurance Coverage.

Long Term Care coverage transfers your financial risk of a long-term chronic illness of the insured individual. 58% of men will need some Long-Term Care services for an average of 2.2 years, and 79% of women will need Long Term Care services for an average of 3.7 years. Below are the current costs of Long-Term Care Services in Illinois. Costs are increasing an average of about 4% per year. (Cost have been calculated using Genworth LTC cost of Long Term Care by Geographical location calculator located at https://www.genworth.com/aging-and-you/finances/cost-of-care.html)



Now we can calculate your financial risk. For example, a male will pay for 2.2 years of a home health aide in Illinois at the cost of $125,840 in today's dollars. Simple math can calculate all your other options. Other factors will increase your likelihood of needing LTC services above the stated averages. They include, your current and previous health issues, family history and genetic predispositions, history of longevity, and a few others. As your risk for Long Term Care increases, as should your willingness to transfer such risk. Also, keep in mind that statistically, women outlive men, live longer with chronic illnesses, have a more prolonged LTC need, and are usually the caretakers for all other ailing family members. Coincidentally women are also harder to acquire coverage.

I have decided I want to transfer my LTC risk. Should I elect to participate in AbbVie’s LTC plan or search for one on my own?

To begin with, let us review AbbVie’s LTC Plan at a fundamental level. 


How Do I qualify? If you are 18 years of age or older and work an average of 20 hours a week, you are eligible, as well as any associated individuals. Refer to the list below for the definition of "eligible individuals" per plan documents.

Do I have to take a medical exam or answer medical questions? One of the main advantages you have within the AbbVie LTC Plan is modified underwriting (an abbreviated medical screening process). This option is only available for new Employees under the age of 65 and within 60 days of your hire date. Only the AbbVie employee can apply for modified underwriting, and once the 60 days have lapsed, your modified underwriting option changes to full underwriting. Why is this an advantage? Typically, you will get better coverage options and better premium rates with modified rather than full underwriting.   

How do I pay for it? Once the LTC policy has been approved, you will pay for it with after-tax dollars sent directly to the insurance company (Genworth). Since your premiums are paid with after tax dollars, your benefits will not be taxable.



What are the main advantages of enrolling in the AbbVie LTC plan? This plan is transferable, which means you can take it with you if you ever choose to leave AbbVie as long as you continue paying your premiums. You have a modified underwriting option for the first 60 days of employment which could result in better coverage with lower premiums. 

What about outside plans? Are they better? Long Term Care Policies and the Long-Term Care Insurance market has gone through some significant changes in the past 20 years. You now can tailor your long-term care policy to precisely the risk you would like to transfer.  The answer to this is, it depends. What risk are you looking to transfer? What is your current health status? How old are you? Have you ever applied for a long-term care policy in the past? Would you like a reimbursement if you end up not utilizing any benefits? These questions and more will be critical when choosing where to place your long-term care coverage and how.

Where should you start to evaluate what program is the best for you? You should reach out to your trusted financial advisor to get started.

Are you looking for a trusted financial advisor to help you navigate AbbVie’s LTC program and more? Contact me at dave@retirementmattersillinois.com.