Long Term Care Insurance
- Do I qualify?
- Why do I need long-term care insurance now, when I'm healthy?
- Won't Medicare pay for my long-term care needs?
- What about disability insurance? Does it cover long-term care?
- Wouldn't I be better off putting money aside now to pay for my long-term care needs?
- How does long-term care insurance work, and what should I look for in a policy?
Do I Qualify?
If you are in reasonably good health, you probably qualify for long-term care insurance. Anyone up to age 99 is generally eligible. However, a variety of illnesses, diseases or health conditions such as diabetes can affect your eligibility. Because your premiums will be based on your age and your health, the best time to look into a policy is when you are still young and healthy.
Why do I need long-term care insurance now, when I'm healthy?
Long-term care insurance policies are age- and health-related. You must be in reasonably good health to purchase a policy, and the younger you are, the lower your premium will be.
There are several reasons to consider buying long-term care insurance now. Long-term care needs don't always arise gradually. Sometimes a sudden occurrence, such as a stroke, creates an immediate need. Although most people think of long-term care as being for the very elderly, over 40% of those receiving long-term care are under 65.* And finally, health care costs are continuing to rise. If you wait ten years, you'll be buying a policy based on much higher daily care rates, and your premium will be higher because of your age.
The bottom line: Anyone over 40 should consider a policy.
*("Long-Term Care: Diverse Growing Population Includes Millions of Americans of All Ages", p. 5. General Accounting Office GAO/HEHS-95-26, November, 1994.)
Won't Medicare pay for my long-term care needs?
Medicare's coverage of long-term care is limited. Medicare only pays for up to 100 days of care in a post acute rehab facility, and you must be hospitalized for a certain amount of time before you can qualify for the benefits. Relying on Medicare can also decrease the number of facilities you have to choose from. Medicaid (state-sponsored programs) often has similar restrictions. In order to have a variety of options at your disposal, long-term care insurance is the safest plan.
What about disability insurance? Does it cover long-term care?
Disability policies are designed to replace income lost due to a disability. Long-term disability insurance is intended to pay living expenses, such as housing, utilities and food, and may not cover long-term care costs. Disability insurance may be tied to employment, and if so, you lose it when you leave your job.
Long-term care insurance, on the other hand, pays specifically for health care expenses, and is a policy you can always keep no matter where you bought it.
Wouldn't I be better off putting money aside now to pay for my long-term care needs?
Many people mistakenly assume that their savings will cover their long-term care needs. But today's long-term care costs can quickly exhaust even a considerable savings account, and those savings may be needed to pay for costs other than medical care.
Consider the following example: A married couple, both age 50, who put away $1,300 a year-about what a premium costs for good policy-and earned ten percent interest for 30 years would probably save only enough money to pay for about one year of care for one person at future prices.*
Long-term care insurance offers an affordable and more reliable alternative.
*Example provided by LTC Consultants.
How does long-term care insurance work, and what should I look for in a policy?
Long-term care insurance offers a daily benefit that covers the cost of nursing or custodial care. Your benefits are paid when you become unable to handle the normal activities of daily living, such as bathing.
Heightened demand has resulted in a wide variety of long-term care insurance plans. You may choose a comprehensive plan that covers all levels of care, or a more specific plan that covers a particular level of care, such as home care or post acute rehab care. When you are considering a policy, remember to look at the following items:
- The benefit amount (the amount the policy pays each day)
- The elimination period (the amount of time you'll have to wait before you're eligible for benefits)
- The benefit period (the length of time you will receive benefits)
- The inflation protection rider (a clause that automatically increases your daily benefit amount each year)
