Date: 3/31/2009 7:21 PM
One option for addressing the high costs of long-term care is to buy an insurance policy. Policies can cover the cost of hiring someone to help the recipient with in-home cleaning, cooking, bathing and dressing.
Coverage may also include assisted living in a facility outside the home or could include nursing home care.
The AARP offers several tips if you’re considering long-term health care insurance.
1. Buy a policy when you’re still middle aged and before the onset of serious health problems. Waiting until you’re in your 70s or 80s or in failing health could mean insurers won’t sell you insurance or they’ll make premiums too expensive.
2. Balance your goals with the cost. Goals should include protecting your assets, minimizing your dependence on other family members, and controlling where and how you receive long-term care services. For a 65-year-old, a policy could cost between $2,000 and $3,000 a year to cover nursing home care and home care. You may choose not to buy a policy if it forces you to lower your quality of living or makes you give up things you need now.
3. Decide what coverage suits you best. Some pay only for nursing home care, others only for in-home care. Polices can be purchased to cover a mixture of options including home care (sometimes including care by a family member), assisted living or adult day care.
4. Look at the daily or monthly benefit, which shows limits to what the insurance company will pay. If the cost of your care exceeds these limits, you’ll have to pay the difference. Policies also will have a benefit period, which may be two years, six years, or the rest of your life.
5. Check to see what kind of inflation protection is included in the policy. Medical care expenses climb so rapidly that a lack of inflation protection may leave you paying a large portion of care yourself.
6. Make sure that your long-term care policy doesn’t require that you spend time in a hospital to receive benefits; that it will be renewed as long as you pay premiums; and that it lets you stop paying premiums once you begin receiving benefits. Also make sure it covers pre-existing conditions if you disclosed them when you applied.
7. Consider optional products including life insurance policies or annuities with long-term care benefit riders.
Sources: AARP: http://www.aarp.org/money/financial_planning/sessionfive/longter —ca re_insurance.html
Copyright 2009 The Associated Press.
It has been mistakenly called “nursing home insurance”. Less than 37% of claims on long term care policies are for nursing homes. More than 63% of claims are for home healthcare and community care.
The funny thing about long term care insurance is that the price of a policy can vary a lot from one insurance company to the next. Each long term care policy has a different way of charging premium based upon health history, marital status, choice of benefits, and even state of residence. When comparing nearly identical benefits from 10 of the top policies, the premiums will often vary by 75% or more, from the lowest to the highest. It pays to shop.
What most people don’t realize is that group long term care insurance policies are usually more expensive and have less benefits (particularly less benefits for home healthcare) than individual policies. It pays to shop and compare all types of insurance, but especially long term care insurance.
Scott A. Olson