About 70 percent of people over the age of 65 will develop a
physical or mental condition at some point that will cause them to need help
with daily activities. Whether you get care at home, an assisted living
facility, or nursing home, long-term care is very expensive. Nursing home care
averages about $6,350 per month. But even people who receive care at home spend
an average of $1,600 a month.
Medicare pays nothing at all for long-term care, and provides only
limited coverage for medically-related home health care, or short-term nursing
home care after a certain length of time in the hospital.
Long-term care insurance, however, has its shortcomings. It’s
pricey, especially since you may pay for it years before you use it. Some
insurers have hiked premiums so high that policyholders have been forced to drop
their coverage, losing all of the money they paid.
Independent financial planners (who don’t sell long term care
policies) say that if you have a net worth below $200,000 to $300,000 (not
including your home), a long-term care policy won’t be an affordable option. If
you have assets exceeding $2 million, you should be able to pay for care
yourself. If you fall in between, consider looking into the coverage. They
also say that if you’re healthy, the best time to shop for a policy is your
early 60s. If you wait much longer, you may not pass the required physical and
the premium may become unaffordable.
Here are some things to consider when looking for
coverage:
• Check the insurer’s financial strength. Since you may have your
policy for decades, look for an insurer that gets top ratings from companies
like A.M Best, Moody’s, Standard & Poor’s or Weiss. You may want to
consider policies from companies that sell long-term insurance plans in
partnership programs available in several states.
• Select a daily benefit amount. You can select an amount like
$100 to as much as $500. You can learn the average costs in your area by
visiting the government’s National Clearinghouse for Long Term Care Information
website at: http://www.longtermcare.gov/LTC/Main_Site/index.aspx
. One important option to select is inflation protection. The cost of
long-term care is expected to increase by at least 5% per year. If the daily
benefit does not cover some extras like drugs, supplies and extra
services,consider adding these. When comparing plans, make sure you compare
plans with similar coverage caps or the maximum amount that the plans will
pay.
• Look for a flexible plan. Long term care policies can impose
restrictions on how you qualify for benefits. Try to select one that lets your
doctor decide if you qualify or one that requires that a person be unable to
perform two activities of daily living. Some require more. Look for coverage
for home care, adult day care, as well as assisted living and nursing home
care.
• Choose a benefit period. The average stay for people in
assisted living is 28 months, so you may want to consider a longer benefit.
Get a free planning guide for long-term care visit http://www.longtermcare.gov
To find
out about programs that might help pay for long term care, look under “aging” or
“human services” in the local government blue pages of your phone book.
