It's likely that at some point in your life you will need assistance with your daily activities. In fact, the U. S. Department of Health and Human Services estimates that 70% of people over age 65 eventually will need long-term care, whether in a home setting, a senior living community or a nursing home.
Long-term care insurance differs from disability insurance in that it might help cover the costs of these services and may help you preserve your financial resources. Just follow a few guidelines and keep these factors in mind if you're thinking about purchasing coverage.
Why do I need long-term care coverage?A long-term care insurance policy helps cover the costs associated with the care of individuals with disabilities, chronic medical conditions and disorder such as Alzheimer’s disease. In most cases, policies reimburse you for the care given at such places as:
- Your home.
- A nursing home.
- An assisted living facility.
- An adult day care center.
In most cases, this allows for:
- The protection of savings. Long-term care can empty your retirement savings quickly. A long-term care policy helps offset the cost associated with the additional care needed.
- Allows for more choices of care. Medicaid does not pay for assisted living in many states. A long-term care policy helps offset the cost of those facilities.
When should I get a long-term care policy?
Look at long-term care insurance well before you need it. The longer you wait to purchase a plan, the higher your initial premium may be. Also, if you wait, it's more likely you'll have a health condition that may disqualify you from getting coverage. While there's no right age to buy, the American Association for Long-Term Care Insurance estimates more than half of long-term care policies are purchased by people ages 55 to 64. The rates of a long-term care policy typically include:
- Your age and health: As you age, you typically have more health issues which might increase your premium.
- Gender: Women generally outlive men, increasing the chance of a long-term care claim.
- Marital status: Premiums typically are lower for married couples than single individuals.
- Amount of coverage: Additional coverage options, such as higher limits on the daily and lifetime benefits, cost-of-living adjustments to protect against inflation, shorter elimination periods, might increase the premium.
How do I find a long-term care policy?
Coverage and cost vary, so shop around for a plan that will be reasonably affordable based on the coverages you want, rather than choosing the first one you find.
It's not always easy to evaluate plans. Compare these key features:
- Benefit trigger. The criteria the insurer uses to determine when your policy will go into effect.
- Elimination period. The number of days you'll pay for care out of your own pocket before you begin receiving benefits. Thirty days is the minimum elimination period for many long-term care plans.
- Daily benefits. The amount the policy will pay on a daily basis. Some plans pay benefits based on the hours of service, such as the number of hours a home health aide visits your home.
- Inflation adjustment. A feature that helps your benefits keep pace with rising costs.
- Types of services. A description of what's covered under each plan and where you may receive this care at home or in an assisted living residence, adult day care facility, nursing home or other setting.
- Duration of benefits. The length of time you'll receive benefits, from a few years to as long as you live.
- Exclusions. Stipulated conditions or acts that the benefits won't cover. These could include conditions caused by alcoholism or dangerous behaviors.
Learn more about long-term care insurance from the HHS National Clearinghouse for Long-Term Care information.