Long-Term Care Insurance
Have you ever worried about medical costs consuming your savings?
Rising medical costs and longer life expectancies are making this a concern for many. There
are some government programs like Medicaid and Medicare that can help cover some expenses of
long-term care. However, there are restrictions on what is covered and qualifying for these
programs may only be possible after you have used all your personal savings.
With long-term care insurance, you will be in a better position to get the care and
services you need. You will have a greater opportunity to choose the type of care you want.
You can protect your other assets and be in a better position to leave assets to heirs when
you pass away. You will be in more control of your financial future.
The Costs of Long-term Care
Several studies have found that a year's stay in a nursing home can cost over $50,000. Even
the cost of having a skilled professional come to your home and provide care three times a
week can be over $15,000 annually depending on what type of care you need. While life
expectancies are increasing, amount of care we need (and its cost) seems to be increasing
Paying for Long-term Care
Neither Medicare nor private medical insurance cover most long-term care costs. Medicare
will pay for some special services, but most people receiving long-term care need help with
things not covered, like bathing, dressing and eating. In most cases, Medicare does not
Medicaid will cover nursing home care, but it functions like a safety-net type program.
To get Medicaid help, you must meet federal and state guidelines for income and assets. Many
people start paying for care out of their personal assets and then qualify for Medicaid when
their personal assets are depleted. While some assets and income can be protected, by the
time you qualify for Medicaid, you will probably have used up most of the assets you had
hoped to pass on to surviving family members.
Long-term care insurance is another way to pay for some or all of your long-term
care. This type of insurance was introduced in the 1980s as nursing home insurance but now
covers a great deal more. The greatest benefits of these policies are that they enable you
to make more decisions about your care and they help protect your other assets.
- Usually, age 50 is the time to consider a long-term care policy. Younger than that,
you probably do not need it and older than that, you may have a condition that could
prevent you from qualifying or result in higher premiums. The earlier you buy the
coverage, the lower the premiums.
- Be sure the insurance company is financially sound. You may qualify for benefits
for a long time and you want the insurance company to be around. You can get ratings
reports from your agent or at the library on insurance companies.
- Review what types of expenses are covered by the policy. Some policies provide
coverage for only some services, a limited period of time or only up to a certain total
dollar limit. As you would expect, the more services covered, the higher the
- Get the coverage you need. Many experts suggest at least three years' coverage.
While three years in a nursing home today may cost $150,000, be sure the policy you are
considering protects you against medical cost inflation.
- Review the elimination period. This refers to the amount of time between you start
receiving care and when your insurance starts paying.
- Be sure to understand what makes you eligible for benefits.
- Make sure the policy is guaranteed renewable. This does not necessarily mean that
your premiums will not rise. It does mean you can still get the coverage.
Long-term care insurance can be a critical part of your overall financial plan. If you have
substantial assets and do not want to rely on Medicare or Medicaid, you should consider it.
When shopping for a policy, talk to several companies, ask a lot of questions and be sure to
understand all the terms of the policy.