Many older Americans will need help as they age. Among those reaching age 65 in 2017, almost 70 percent will need some form of
If you have children, they may be able to pitch in and help. The alternative, Medicaid, will pick up the tab only after all savings have been exhausted; applicants must be destitute. While there are ways to shield assets from Medicaid,
Many people mistakenly think Medicare can help. However, the government’s health insurance program for seniors will only cover care in a skilled nursing facility for a limited period after a hospitalization. It doesn’t pay for ongoing, custodial (non-skilled) care. The other alternative is a
Basics of Long-Term Care Insurance Policies
Long-term care insurance policies can be complicated. They often include several variables which can make an apples-to-apples comparison between plans difficult. Here are some of the major details to look for:
- Daily maximum: The maximum amount the plan will pay for each day of care.
- Benefit period: How many years of coverage are included in the plan.
- Eligibility: When someone is eligible for plan benefits – often when a cognitive impairment is diagnosed or a person is unable to complete a certain number of “activities of daily living.”
- Waiting/elimination period: The period of time in which you’ll have to pay for care out of pocket before a policy begins paying out benefits.
- Inflation protection: Provision that increases the daily maximum over time.
- Waiver of premium: Provision that eliminates the need to pay further premiums once benefits have begun.
How it works
To break it down into a real-world example, let’s assume you have a policy with a $150 daily maximum, a two-year benefit period and a two-month waiting period.
Now, let’s say that you’re ready to move into an assisted living facility because it’s becoming a bit too much to move around your house on your own. Your insurance company will send a nurse to do an evaluation. They will look at your medical records and ask a series of questions. In most cases, they are checking to see if you need help with activities of daily living – bathing, dressing, feeding, toileting, transferring (moving from a chair to a bed, for instance) and walking.
If you qualify for coverage, in our example, you have to pay for two months of care out of pocket to meet the waiting period requirement. This could be a significant amount, upwards of $10,000 depending on the facility and care you need. You’ll have to submit bills to your insurer to show you’ve met the waiting period, and your company may request additional information from the facility to ensure they are an eligible provider.
Once your benefits have started, many companies will have you pay the provider directly and then submit the receipt for reimbursement. The benefit period can be a bit misleading because your benefits could last longer, depending on the cost of your care and the policy details.
For our example, a $150 daily maximum for a two year benefit period will provide $109,500 in benefits. If your care costs less than $150 a day, most policies will continue to pay out past the
How Much Does Long Term Care Insurance Cost?
For the lowest rates,
- Age 45: $1,439.34
- Age 55: 1,552.50
- Age 65: $2,435.18
- Age 75: $5,582.10
However, actual premiums will depend on the policy details. For instance, those with provisions such as inflation protection and waiver of premiums may cost more.
When shopping for insurance, also keep in mind the actual cost of care in your area. The U.S. Department of Health and Human Services estimated that the national average for assisted living care was $119 a day while a private nursing home room was $253 a day in 2017.
To ensure you’re getting the best price possible and purchasing from a reputable company, work with an insurance agent who has extensive experience with
What Happens if You Can No Longer Afford Your
Long Term Care Insurance?
Premium increases for
Since then, insurers have gathered extensive claim information and now price policies in a way that should keep premiums relatively stable. Many states have enacted safeguards to protect consumers from price spikes as well.
Naturally, everyone hopes and expects to live out their days on their own. However, if you think you’ll need assistance at some point in the future the time to think about long-term insurance is now. It’s the smart thing to do.