Bearing the Burden of Nursing Home Care in Your Golden Years: Long-Term Care Insurance
In this struggling economy, everyone is more aware of life's ever increasing expenses. As we grow older, worry about dealing with the financial burden of the "extras" that Medicare and Medicaid don't cover, such as part-time home care, physical therapy sessions, and various prescription drugs, creeps in. Long-term care insurance seems to be an answer to the ever-growing need.
Should I purchase long-term care insurance?
Medicare only pays for short-term medical care at home or for a limited stay in a nursing home facility after a hospitalization. Medicaid pays for long-term care - but only after people have spent the majority of their assets. If a situation exists where one half of a married couple has to enter a nursing home facility and the couple "spends down" all of their assets, the remaining half of the couple could be in a financial predicament if they outlive their spouse. Long-term care insurance can help to protect assets and pay for expenses.
At what age should I worry about carrying long-term care insurance?
Try to begin considering long-term care insurance in your 50s. If you wait until your 60s, pre-existing health problems may preclude you from qualifying for a policy. Additionally, the younger you are, the lower the premiums.
What type of coverage am I looking for?
First, under nearly all long-term care policies, coverage begins when the insured can no longer perform activities of daily living, such as walking, eating, or bathing, due to a physical or mental impairment. Confirm that long-term care coverage will begin if you cannot perform any one of the three activities - not all three.
Make sure that your long-term care policy covers all types of care, such as nursing home care, assisted living care, and home health care attendants. Most policies do provide for all these types of care, but you should review the policy carefully to ensure that the policy does not contain narrow restrictions.
Ensure that your policy covers all types of caregivers. You might want to have someone come in and prepare meals and clean, so make sure your policy pays for "skilled, intermediate, and custodial care".
Your policy should cover a wide range of illnesses and injuries. Carefully read your long-term care policy to ensure that your policy does not exclude more than it includes.
Inflation protection is key. Your long-term care coverage should increase the daily benefit amount enough to sufficiently cover inflation. If it does not, you could be responsible for the overage.
Long-term care insurance is expensive. To try and maximize your benefits and try to lessen the financial burden:
- Consider avoiding lifetime benefits. If you enjoy playing the odds, you might want a policy that covers a set amount of time, such as four to five years. The average nursing home stay is two to three years and only 12% of nursing home residents live longer than five years once they enter. Of course, if you are in that 12%, you may have a problem paying for the care after the time period expires.
- Find a policy that pays a monthly sum. That way, you have the flexibility to receive more care on some days and less on others.
- Consider a "front-loaded" policy. With these types of policies, the insured pays the entire cost of the premiums before retirement and a deceased income.
- Consider cash benefit policies. These types of policies will send you regular cash payments. You are free to use these payments for whatever you wish.
This information is provided to inform of various options and is certainly not legal advice. If you are in the market for long-term care insurance, contact a local elder law attorney and/or insurance agent for more specific information on this important topic.
