Planning for Long Term Care

As we age, the odds of incurring an injury or major illness that will prevent us from performing simple daily functions increase substantially. Today, one in three people over the age of 65 will require assisted care of some sort. Past age 75 the odds increase to where one in two will need nursing care. With the average cost of nursing care now surpassing $7000 a month, it’s no wonder that long term care often decimates the savings and assets of the seniors who need it.

While there is a portion of seniors who have amassed the assets to be able to cover long term care, most Americans would use up their savings within a few years.  There is assistance available from the government in the form of Medicare; however, it only provides limited coverage.  When seniors spend all of their assets on long term care, they may qualify for Medicaid, however, it has strict requirements and the quality of care may not be the best.

Long-Term Care Needs

With the odds of needing care so firmly stacked against seniors, long-term care insurance would seem to be a practical solution to protect their assets and ensure that they receive quality care. Seniors who can no longer perform basic daily living functions such as walking, bathing, dressing usually need the assistance of a home health care nurse or a nursing home facility, and the costs can be prohibitive.

Covering Long-Term Care

Seniors may have several options for covering their long-term care expenses.  Reverse mortgages are becoming a popular method of freeing the equity in a home. Some health insurance plans provide some long term care benefits, but they are usually limited. Outside of these possible options, a long-term care insurance policy is probably the most cost-effective solution.

Long-Term Care Insurance Basics

Benefit Payments: Benefits are paid in one of three forms. An indemnity policy pays a specific daily benefit. A reimbursement policy pays the actual cost of care or the benefit amount whichever is lower. And full care coverage plans, will pay the total daily benefit amount regardless of how much care was actually received.

Waiting Period: The insured can select a period of time, between 0 days and 120 days, before which benefits will be paid. If the insured has the ability to pay for care from personal assets, the waiting period can be extended which would lower the premium costs.

Home care option: Most policies provide for nursing coverage, but if home care is preferred, a rider can be added, at a cost, to cover the cost of care at home.

Inflation Protection: Long-term care costs have, historically, risen faster than inflation.  Since the actual need for care might not occur for many years after the purchase of a policy, this protection would ensure that your benefits could cover future costs.

Long-term care insurance policies have proliferated in the last couple of decades.  The vast number of companies that offer an expanding menu of different long term care products can make the task of choosing the right one a daunting one.  Working with a specialist who has access to the long-term care products of several companies will ensure that you receive unbiased guidance and a solid policy.

For more information on insurance protection, see Disability Income Protection.