A Personal Take Of Long-Term Care Insurance
WSJ personal finance columnist Terri Cullen reviews the suitability of long-term care insurance to each of her family members. The conclusion, either one is not qualified, or one'd better save and invest instead of paying for insurance premiums for decades before any benefits.
"Why the need for insurance? Long-term care is expensive: The average nursing-home cost for a private room is $206 a day, or $75,190 a year, according to a 2006 survey by the Metlife Mature Market Institute. On average, a home health-care aide costs $19 an hour, or $55,480 a year for eight hours of daily care. In New Jersey, where our parents live, the costs are even higher, averaging $250 to $260 a day for nursing-home care and $20 an hour for an in-home aide. (Click here and click on the "Metlife Market Survey" to see average costs in your area.) How likely is it that our parents will need long-term care? At any given time only about 4% of people age 65 and over ..." Full StoryLong Term Care Insurance Mistake To Avoid
Great article. Long term care insurance is not like car insurance, which everyone who drives will need one.
"1. Buying based on Fear Although there are cases where an individual may require Long Term Care services for 10 years or more due to Alzheimer’s or other chronic illnesses, these cases are infrequent. Out of $1Billion dollars spent on actual claims by insurance companies over the last 10 years, 98% of all claims were closed in 60 months. 93% of all claims were closed in less than 36 months. If you buy a policy that covers care for 5 years, you will be covering 98% of the statistical risk. Be careful if you do not have the resources to cover costs over this amount of time. If you buy a Lifetime plan, consider reducing the daily benefit and self insuring part of the cost ..." Full StoryWhat Determines Long Term Care Insurance Premium
Studies show that most of us are going to need long term care at some point in our lives. Keep in mind that long term care does not necessarily mean care for the rest of your life. Long term care needs can stem from an automobile accident in which your injuries may only be severe enough to require assistance for a few weeks or months, to just plain old age in which case you may need assistance for the rest of your life. Since so many of us are going to need long term care at some point, we have to wonder whether or not we should purchase long term care insurance. It is a daunting decision, given the fact that we spend so much ... Full Story
Medicaid and Long-Term Care
Yes, Medicaid does offer long-term care benefits, but if you have too much money, you will need to rely on yourself.
"Almost half of all nursing-home care billings are satisfied by Medicaid programs. This coverage is only for those who meet federal poverty guidelines for income and assets. For many people it means consuming assets to qualify for health care. Usually a personal residence is not counted when determining Medicaid eligibility, but other assets must be reduced to qualify. When it comes to long-term care it is common for the elderly to pay for care from their assets until they reach the poverty level and qualify for Medicaid to continue paying for nursing home expenses. As a result most people in nursing homes are so poor that financially they need to remain in the nursing home. Qualifying for Medicaid differs from state to state as does ..." Full StoryWho Should Buy Long Term Care Insurance?
Having too much money or too little, and chances are you don't need long term care insurance.
"Long-term care insurance policy is not for everyone. For a limited population, long-term care policy makes sense as an affordable and worthwhile form of insurance. Buying long-term coverage should not cause financial hardship and force you to forego other financial needs. Whether long-term care insurance is appropriate requires a full financial analysis. For many people it is not a good idea. Although the need for long-term care can arise gradually as a person ages and needs more and more assistance with activities of daily living, for most a stroke or a heart attack will be the precipitating need. Those with acute illnesses may need nursing-home care for a matter of months, while others may need care for years. In any specific case it is difficult ..." Full StoryMedicare Does Not Offer Long-Term Care Benefit
Medicare supplement policies are sold by private insurance companies and are offered to fill some of the gaps in Medicare coverage. Hospital deductibles and excess physicians' charges are routinely covered, but these policies do not cover long-term care expenses. Standardized Medicare supplement policies, Plans D, G, I and J, do contain an at-home recovery benefit that may pay up to $1,600 per year but only for short-term, at-home assistance with activities of daily living, for an illness, injury or surgery during a limited recovery period. Full Story
Quick Test Of Long-Term Care Insurance Suitability
After reading many literature of long-term care insurance, I found this quick test to be quite effective in determining whether one should acquire long term care insurance coverage.
"Consider a plan if: By around age 55, you have a chronic medical condition that you and your doctor believe could eventually require nursing-home care or if you have a family history of a debilitating disease. AND Your assets are between $200,000 and $1.5 million, and you must protect them for a spouse or relatives. AND You have no willing or available family member to take care of you. Even with the support of community and professional home-care services, you’ll need a family caregiver. Because women live longer than men, they are more likely to need nursing-home care. " Full StoryLong Term Care Insurance: Sales Pitches And Their Catches
Long term care insurance is a big investment into your future, so you should look through the common sales pitches and make sure you get what you want.
"The pitch: You need to buy long-term-care insurance when you are young. More than 40 percent of people who need long-term care are under age 65. The catch: Only 159,000 of the 238 million people under age 65, or less than 1 percent, receive nursing-home care. The pitch: There is nearly a 50 percent chance that a person will require 24-hour care in a skilled-nursing facility. The catch: One percent of those ages 65 to 74 live in a nursing home, 4 percent of 75- to 84-year-olds, and 19 percent of those age 85 and older. The pitch: If you are over age 65, you don’t need inflation protection. The catch: According to the most recently published figures, the average age of admission to a ..." Full StoryHow To Choose Long-Term Care Insurance
Very good tips from Consumer Reports that everyone should ready before buying long term care insurance.
"In preparing this report, we established criteria that could make a policy a worthwhile hedge against the costs of long-term care, if you can afford it. If you decide that you want a policy, follow these shopping guidelines. Consider buying at around age 65. Although salespeople will try to get you to buy a policy as young as age 40, the coverage may be useless 40 years hence when you need it. New systems for care may emerge that will not be covered by a policy purchased today. For example, 15 years ago, long-term-care insurance did not pay for care in assisted-living facilities. Between the ages of 55 and 60, buy long-term-care insurance only if you have a chronic condition like diabetes that could prove ..." Full StoryIs Long-Term Care Insurance For You?
The poors cannot afford it; the riches don't need it. But for the middle class, think hard before you buy the long-term care insurance.
"While long-term care insurance can make sense for many people, middle- and upper-middle-class folks probably benefit more than any other group. Couples with investable assets between $200,000 and $2 million are prime candidates, says certified financial planner Harold Evensky of Coral Gables, Fla.-based Evensky & Katz Wealth Management, since they could see their savings devastated by long-term-care expenses. People with assets of less than $200,000 generally can't afford long-term-care premiums, and many in this group would qualify for Medicaid, which provides medical services for people with low incomes and few resources. What's more, people with modest incomes are probably better off shoring up their savings by increasing their 401(k) contributions or saving in an IRA account. Things get more complex for people with investable assets ..." Full StoryWhen Should You Start Buying Long Term Care Insurance?
Figuring out the right age to start getting long-term care insurance is difficult, but as a rule of thumb, you should get one before 60.
"The average age of people buying individual long-term-care insurance is 60, according to 2002 figures (the most recent available) from America's Health Insurance Plans. Many experts say that buying in your 50s can make sense, since you're more likely to be eligible for coverage than if you wait, and premiums will be easier to handle out of pocket. The average annual premium for someone age 50 with a $150 daily benefit for four years (with a 5% compound inflation adjustment) and a 90-day elimination period was $1,134 in 2002, according to AHIP. For someone age 65, it was $2,346, and at 79, it was $7,572. Keep in mind, however, that while the annual premium is lower if you take out a policy while still in ..." Full StoryShould I Buy Long-Term Care Insurance
In short, long-term care insurance is not for everyone. You should carefully evaluate your risk and objectives before you pull the trigger.
"Long-term care insurance policy is not for everyone. For a limited population, long-term care policy makes sense as an affordable and worthwhile form of insurance. Buying long-term coverage should not cause financial hardship and force you to forego other financial needs. Whether long-term care insurance is appropriate requires a full financial analysis. For many people it is not a good idea. ... Buying a policy is a function of your age, health status, overall retirement objectives, income and wealth. If the only source of income is a minimum Social Security benefit or Supplemental Security Income (SSI), do not purchase a policy. If paying utilities, food or medicine stretches a budget; this person should not purchase a policy. Long-term care policies are only for people with ..." Full StoryWho Should Pay For Long-Term Care?
If you are above the poverty line, expect to pay most of your long-term care bills.
"The answer is simple: it comes from your cash and your assets, your family's assets and for those without assets it is paid by Medicaid programs administered by state government. More than half of nursing home bills are paid out-of-pocket by individuals and their families, and somewhat less than half are paid by state Medicaid programs. Insurance, and that includes Medicare, Medicare supplemental coverage and health insurance provided by employers, does not pay for most long-term care expenses. Only in certain cases will Medicare cover the cost of some skilled nursing care in approved nursing homes or in your home, but there is no coverage for custodial or intermediate care or prolonged home health care." Full StoryDefining Long Term Care
The term "long term care" may have been used broadly, but here are some common specific kinds of care included in most policies.
"As a result of disability or a prolonged illness, long-term care is the assistance provided when a person is unable to provide for himself or herself. It ranges from providing personal care at home, such as bathing and dressing, to skilled nursing services in a nursing home. Long-term care is offered through home care agencies, senior centers, adult day care centers, traditional nursing homes, and retirement communities that provide on-going care. In considering long-term care insurance policies various kinds of care are mentioned. Here are the most commonly used terms and their generally accepted meaning. Remember, the definitions given here can and often times are re-defined by carriers in their policy and given special meaning under a particular contract. It is important to read the ..." Full StorySponsors
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