An estimated 70% of people over the age of 65 require some long-term care during their lives. How can you prepare if you’re one of them? To begin, it’s important to understand what long-term care insurance can and cannot provide. Long-term care insurance provides those with chronic illnesses or disabilities with ongoing care over an extended period. The traditional health care insurance policy that you currently have will not cover such expenses. Medicare will only cover limited stays in a nursing home. Medicaid may cover expenses for those who qualify.
Medi-Cal has specific rules, too, which you can read about HERE.
The cost of long-term care services is very high. Nationally, the average daily cost for a shared room is $305 per day. Depending on where you live, the cost can be considerably higher, especially in parts of Alaska and California, where $1,000 a day is the norm.
There are only three options facing families with a family member requiring long-term care:
- Pay for everything yourself
- Have a family member care for you
- Purchase long-term care insurance
Long-term care insurance is not for everyone, as it is also expensive and has limitations. It is designed to protect your assets from being taken by the facility.
Educating yourself
Here is what you need to know to make an informed decision about your health and financial future:
- The first thing you will want to do is shop around for the cost of care that meets your needs. Get a feel for what different types of assisted living and nursing home facilities cost in your region. Next, check the cost with several insurers in your area and make sure you are doing an “apples to apples” comparison — that is, you are comparing the same benefits, types of facilities covered, limits on your coverage, and premium cost.
- When you purchase long-term care insurance, you set the amount of coverage that you want — usually a daily or monthly benefit. You can select a policy that has a cap on it. Say you have a policy with a cap of $200,000 for care. Once that amount is paid out, you are back to paying for the care on your own. While insurance companies once covered you for your lifetime, coverage is now limited to only three to five years. Most people will need to have extended coverage beyond the term of the policy and wind up paying for care out of pocket.
- Another option to consider is purchasing a policy that pays out a lower amount with the idea that you would make up the difference at your own expense. For example, if you think long-term care will cost around $6,000 each month, you could buy a policy that pays out $3,000 each month and use your savings to make up the shortfall.
- Not every applicant will meet the health requirements and qualify for long-term care insurance. You need to apply when you are still healthy. People who are between 55 and 69 and in reasonably good health should consider purchasing a policy. The maximum age to apply is 80 for most insurance companies.
With long-term care insurance, you have more options for deciding what treatment you will receive and where. The best time to purchase a policy is before you need the care. Research your possibilities and find the policy that works best for you.
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