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Long-Term Care Insurance: Is It For You?

Sooner or later, chances are good that you, or someone you know, will need long-term care. Often that means professional help in a nursing or skilled care facility. According to Medicare, the phrase “long-term care” actually means much more:  

      “A variety of services that includes medical and non-medical care to people who have a chronic illness or disability. Long-term care helps meet health or personal needs. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom. Long-term care can be provided at home, in the community, in assisted living or in nursing homes. It is important to remember that you may need long-term care at any age.

However, Medicare generally doesn’t pay for long-term care, especially “custodial care” like bathing, feeding or dressing that allow patients to stay in their own home. “Medicare pays only for medically necessary skilled nursing facility or home health care,” the official page says firmly. “However, you must meet certain conditions for Medicare to pay for these types of care.” (Ironically, they do eventually admit to paying for some kinds of at-home help, “depending on your income and personal resources.”)

If Medicare won’t pay, who will?

 

If the patient is your parent, or someone in your family — or you — the answer is, of course: You. 

According to AARP, the average nursing home charges up to $50,000 a year — or more. About a third of nursing home residents pay that cost out of their estates; the remaining two-third count on Medicaid, a mixture of state and federal help geared toward people with low incomes. Unfortunately, that means that in most cases, the recipient has already drained the family assets. (A spouse may be allowed to keep some items, including the home.) It also means that the facility must be one that’s approved by the government — which means you’ll be more limited in your choices.

Some nursing homes are run by caring individuals, feature good food and gentle care. Some aren’t. And every facility, good or bad, can include a range of skilled, kind, rude and incompetent people. (This writer worked at a reasonably good nursing home while preparing for college, and saw this firsthand.) Certainly nursing homes have provided plenty of examples of neglect and abuse. Others have literally saved their patients’ lives for years to come, and provided a pleasant and helpful environment to the end of their lives.

   If a nursing home is needed, you’ll want to take special care in choosing it, of course. But how to pay for this, without bankrupting yourself, or your family?

Long Term Care Insurance

Into this mess of questions and uncertainty comes one possibility: long term care insurance. Pay our premiums, insurance companies say, and you and your loved ones will not only be protected from financial ruin, but well cared-for. The sooner you purchase a long-term care policy, the cheaper it will be. Completelongtermcare.com offers a chart of a four-year $200-day policy and warns, “You never save money [by not insuring earlier], but you do lose benefits.”

Purchase Age 55 60 65 70 75
Premiums paid until age 85 $46,710 $48,275 $51,600 $55,575 $58,900
Value of Benefits at age 85 $1,201,912 $941,729 $737,869 $578,140 $452,988

In other words, you’ll still pay a stiff premium for long-care insurance — from $1,000 up to $10,000 or more yearly — but the cumulative amount will be less. You don’t pay as much when you’re younger. (On the other hand, you’re probably not apt to use the policy when you’re younger, either.)

Ask Some Questions

If you’re thinking about a long-term care policy, read the fine print and ask questions. Before you sign on the dotted line, you should wonder:

*Do you have a family history of medical problems that would require ongoing skilled care in a facility? If your aunts, uncles and grandparents all lived at home in excellent health before they keeled over suddenly at age 102, it’s quite possible you may, too. If, on the other hand, you have a strong risk of Alzheimer’s Disease or dementia running through the family tree, you might well consider a policy.

*Can you afford to pay the premiums, especially over the long run? (They’ll only increase as you age. But so will the benefits.)

*Will the plan cover as long as you’ll possibly need it? (Example: the plan mentioned above only covers the patient for four years.)

 *Is it ‘tax qualified?’ (Choosing one of these, rather than a plain policy, means your premiums are tax-deductible. Every little bit helps.)

*Are there exclusions? Find out what they are before you commit.

*Can you use home health care, instead of moving to a facility? (Or make sure to choose a long-term health plan that includes this, as well)

*Could you take advantage of a community health center, instead of a facility? Adult daycare is sometimes the way to go, instead.

*What’s your family’s financial picture? Do your parents have a lot of assets to go through before they’re even eligible for Medicaid, or other help?

Long-term insurance isn’t the final cure-all, nor does it guarantee good nursing care. Michael Wolff, in New York Magazine, wrote:  “Make no mistake, the purpose of long-term care insurance is to help finance some of the greatest misery and suffering human beings have yet devised.” If you can afford it, however, it might help keep you or your loved one from stripping assets, in case they need the help of a nursing facility.

It’s not a 100% leadpipe certainty,  that even with this insurance, you’ll make good use of it. Husband’s 83-year-old-mom paid for long-term care insurance for years. She never used a penny of it.

 Why not?

She died at home while taking a nap on the sofa.

(Go here for insurance sites that can give you more information on long-term care policies, including companies to choose from.)

5 Responses to Long-Term Care Insurance: Is It For You?

  1. My wife and I are at the age that we’re struggling with this question. One of our concerns, particularly after the shocking carnage in the financial industry of the 2008 meltdown, is whether it’s sensible to pay big premiums to an insurance company that may or may not survive long enough to pay us any benefits. What happens if the insurance provider goes belly up 20 years from now? Are all of our premiums money lost?

  2. Great post, I have actually been thinking of long term care insurance after speaking with a friend who just had to place his father in a home due to Alzheimer’s. His mother has saved all her life, so having to pay for his care will nearly bankrupt her. I am 42, so my premium will be reasonable if I purchase it now and not wait until I am 50. Really thinking seriously about it, great post!

  3. My wife and I are currently trying to nudge her parents towards purchasing long-term care insurance. Their philosophy is that they’ll die before they get sick, but we’re not so happy with this decision.
    They have assets, but if one gets sick the other may end up moving in with us and that’s something that we’d like to avoid. Currently, we’re unable to purchase the policy for them because we have our own financial duties at the time. However, it does scare me a bit.

  4. In some circumstances Medicare does pay for long-term care. My Mother-in-Law was diagnosed with Alzheimers and the majority of the cost of nursing home care was paid by Medicare. The catch was that the State filed a claim on the home when she passed and took deed to the property.

  5. Long term care insurance is expensive in nature and they only way to beat its cost is by purchasing early and by availing discounts. Since it is costly, people should think carefully whether they will need this type of coverage in the future or not. The questions posted above can really help those people who are confused and can’t decide if they will purchase insurance or not. I agree that assessing your current health and taking into consideration your risk factors and family history can help you come up with the right decision. In my opinion, it’s better to be safe than to suffer the consequences in the future. Yes there is Medicare but it only provides limited coverage and most likely you’ll pay for the excess cost using your savings.

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