Healthcare costs and long-term care costs are one of the biggest
concerns today for many people. Long-term (LT) care insurance can help
protect you against the significant financial risk posed by the
potential need for long-term care services either in a nursing home,
assisted-living facility, or in your own home. These policies can help
you preserve your assets for your spouse and/or heirs. They are
purchased for asset protection, to minimize the dependence on other
family members, and to have some control of where and how you will
receive long-term care services.
LT care goes beyond medical and nursing care to include all the assistance you will need if you have a chronic illness or disability that leaves you unable to care for yourself. The US Department of Health indicates that people age 65 face at least a 40% lifetime risk of entering a nursing home sometime during their life, and 10% will stay there five years or longer. The odds of entering a nursing home increase with age, and currently 22% of people age 85 or older are in a nursing home. While older people are more likely to need LT care, your need for it can come at any age. The average cost of a private nursing home room is about $70,000-$75,000 per year. These costs vary significantly based on what part of the country you live in. The typical stay in a nursing home is between 90 days and four years (average is 2-2.5 years). Benefits are typically triggered when you can't perform two "activities of daily living" such as bathing, feeding yourself, dressing, getting from bed to chair, and going to the bathroom (and the condition is expected to last at least 90 days). Benefits can also be triggered if you develop severe cognitive impairment (like Alzheimer's).
Aren't I already covered for this? No.
Generally Medicare and most regular health insurance plans will not cover long-term care costs. Medicare supplemental insurance (Medigap) also typically does not cover LT care costs.
Who should buy LT care insurance? Who shouldn't bother?
Wealthy people (with assets over $3M) that can afford care on their own typically don't need to buy LT care insurance (they can basically "self-insure"). For a very wealthy family if they are forced to live in a nursing home for 3 years at $75,000 per year the total cost of $225,000 will not wipe them out. Some wealth people buy LT care insurance anyway for the peace of mind and for emotional reasons. "It allows loved ones to care about you rather than caring for you" says Jesse Slome, executive director of the American Association for LT Care Insurance. Those with little assets (below $300,000) also are not great candidates because they likely can't afford the coverage anyway, and they have a smaller amount of assets to protect. Medicaid may take over coverage after they have exhausted their assets (depending on the state). People in the middle in terms of wealth are good candidates for LT care insurance. People who have no relatives nearby that could help take care of them often consider LT care insurance. Single people who have relatives nearby and don't really care about leaving an estate may not need/want LT care insurance. If you have a family history of long-term incapacitating diseases like Alzheimer's, you should think about this type of insurance (and longer duration of insurance) because those types of diseases often cause people to need LT care for many years.
When should I buy it? At what age?
The typical range people buy this insurance is between ages 45 and 70. The premiums increase as you get older (and are thus more likely to end up in a nursing home). The premiums start to increase especially as you get over the age of 60 and are very expensive at age 70+. If you don't have a family history of chronic illnesses and you are in good health you can probably wait until you are around 55-60 years old to buy.
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What are the variables that determine how much my LT care coverage will cost? What are important things to consider when shopping for a policy?
1. Duration of coverage (this can range from just a couple years coverage up to unlimited or lifetime). Given that the average nursing home stay is typically only a few years, lifetime coverage is likely too much for most people and is very expensive. Usually 2-6 years of coverage is enough.
2. Elimination period. This is similar to the deductible on other insurance policies. Your LT care policy doesn't start paying out for a certain number of days. This elimination period is typically 30-90 days.
3. What exactly is covered? Skilled care and non-skilled care covered? Does it cover help at home? Assisted living? Adult day care? Does the policy require a hospital stay before this (home care) benefit is available? Are pre-existing conditions excluded from coverage? Is Alzheimer's covered? Most policies exclude coverage for some mental and nervous disorders, alcoholism, drug abuse, and care after self-inflicted injury.
4. Amount of coverage per day? The higher your daily benefit, the higher your premiums. Typical amounts covered are $100-$200/day of costs. The average cost of a nursing home is around $200/day.
5. Inflation adjusted or not? This is important and makes a big difference over long time periods. It also greatly increases the cost (and value) of the policy. Is the inflation protection "compound" (increases by a set percentage each year) or "simple" (increases by a set dollar amount each year)? Compound inflation protection is better.
LT care goes beyond medical and nursing care to include all the assistance you will need if you have a chronic illness or disability that leaves you unable to care for yourself. The US Department of Health indicates that people age 65 face at least a 40% lifetime risk of entering a nursing home sometime during their life, and 10% will stay there five years or longer. The odds of entering a nursing home increase with age, and currently 22% of people age 85 or older are in a nursing home. While older people are more likely to need LT care, your need for it can come at any age. The average cost of a private nursing home room is about $70,000-$75,000 per year. These costs vary significantly based on what part of the country you live in. The typical stay in a nursing home is between 90 days and four years (average is 2-2.5 years). Benefits are typically triggered when you can't perform two "activities of daily living" such as bathing, feeding yourself, dressing, getting from bed to chair, and going to the bathroom (and the condition is expected to last at least 90 days). Benefits can also be triggered if you develop severe cognitive impairment (like Alzheimer's).
Aren't I already covered for this? No.
Generally Medicare and most regular health insurance plans will not cover long-term care costs. Medicare supplemental insurance (Medigap) also typically does not cover LT care costs.
Who should buy LT care insurance? Who shouldn't bother?
Wealthy people (with assets over $3M) that can afford care on their own typically don't need to buy LT care insurance (they can basically "self-insure"). For a very wealthy family if they are forced to live in a nursing home for 3 years at $75,000 per year the total cost of $225,000 will not wipe them out. Some wealth people buy LT care insurance anyway for the peace of mind and for emotional reasons. "It allows loved ones to care about you rather than caring for you" says Jesse Slome, executive director of the American Association for LT Care Insurance. Those with little assets (below $300,000) also are not great candidates because they likely can't afford the coverage anyway, and they have a smaller amount of assets to protect. Medicaid may take over coverage after they have exhausted their assets (depending on the state). People in the middle in terms of wealth are good candidates for LT care insurance. People who have no relatives nearby that could help take care of them often consider LT care insurance. Single people who have relatives nearby and don't really care about leaving an estate may not need/want LT care insurance. If you have a family history of long-term incapacitating diseases like Alzheimer's, you should think about this type of insurance (and longer duration of insurance) because those types of diseases often cause people to need LT care for many years.
When should I buy it? At what age?
The typical range people buy this insurance is between ages 45 and 70. The premiums increase as you get older (and are thus more likely to end up in a nursing home). The premiums start to increase especially as you get over the age of 60 and are very expensive at age 70+. If you don't have a family history of chronic illnesses and you are in good health you can probably wait until you are around 55-60 years old to buy.
If you loved this information and you would such as to receive additional details pertaining to Mittelstands Assekuranz kindly check out our own web site.
What are the variables that determine how much my LT care coverage will cost? What are important things to consider when shopping for a policy?
1. Duration of coverage (this can range from just a couple years coverage up to unlimited or lifetime). Given that the average nursing home stay is typically only a few years, lifetime coverage is likely too much for most people and is very expensive. Usually 2-6 years of coverage is enough.
2. Elimination period. This is similar to the deductible on other insurance policies. Your LT care policy doesn't start paying out for a certain number of days. This elimination period is typically 30-90 days.
3. What exactly is covered? Skilled care and non-skilled care covered? Does it cover help at home? Assisted living? Adult day care? Does the policy require a hospital stay before this (home care) benefit is available? Are pre-existing conditions excluded from coverage? Is Alzheimer's covered? Most policies exclude coverage for some mental and nervous disorders, alcoholism, drug abuse, and care after self-inflicted injury.
4. Amount of coverage per day? The higher your daily benefit, the higher your premiums. Typical amounts covered are $100-$200/day of costs. The average cost of a nursing home is around $200/day.
5. Inflation adjusted or not? This is important and makes a big difference over long time periods. It also greatly increases the cost (and value) of the policy. Is the inflation protection "compound" (increases by a set percentage each year) or "simple" (increases by a set dollar amount each year)? Compound inflation protection is better.
