Plan Ahead With Long-Term Care Insurance

Millions of baby boomers are wondering how to prepare for the prospect of needing costly care in the future. Long term care insurance is designed to help you cover the costs of a nursing home or other skilled care as you age. As with most insurance policies, you must consider purchasing it before you actually need it, as policies become more expensive once it becomes clear that you need it.

Medicare covers 100 days in a nursing home if you are recovering from an illness or injury and showing improvement, but it offers no help for assisted living or in your home.

Medicaid picks up the tab for a nursing home and some in-home help only after you have all but exhausted your savings.

This is where long-term care insurance comes into play. It reimburses you for at least a portion of the cost of a nursing home, assisted living facility, adult day care or in-home help. To qualify for benefits, you must be able to perform two of these six day-to-day activities: bathing, dressing, moving from bed to chair, using the toilet, eating and maintaining continence.

Many people believe the best alternative to long-term care insurance is to roll the dice and fund your care out of savings. This has been the trend recently as the sale of long-term care fell by 24 percent in 2014 and are down 65 percent from 2004 levels. In fact, just 16 percent of people 65 and older have a policy according to the Center for Retirement Research at Boston College. Unfortunately, according to the U.S. Department of Health and Human Services, upwards of 70 percent of Americans who reach the age of 65 will eventually need some sort of long-term care.

A major concern people have with long-term care insurance is that it’s expensive, but then again so are the costs of long-term care. The current median annual cost of assisted living in the U.S. is $43,539; for a private room in a nursing home, it’s $92,378. So, while the insurance may be a little pricy, it will save you in the long run.

Generally speaking, it’s most cost-effective to buy long-term care insurance between the ages of 50 to 65 and in good health. The younger you buy, the lower the cost — but you will be paying premiums for a longer period of time. On the flip side, premiums tend to go up the older and less healthy you are, and there is a chance you will be denied coverage if your health deteriorates.

Buying a policy could be a smart way to protect yourself, your assets and your family in case of a long illness. Just make sure you exercise a healthy dose of due diligence before you buy.

May 25, 2017 

 

Source: Journal Review Online

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