Having long-term care insurance in place can provide peace of mind to seniors who are concerned about what their future may hold. Even the healthiest person, could find themselves needing care.
About 70% of people over age 65 will require long-term care services at some point and 40% will require nursing home care, according to a September 2008 report from the U.S. Department of Health and Human Services. Long term care (LTC) services includes a broad range of services to assist those with chronic conditions, known as ADLs—essential “Activities of Daily Life.” Long-term care insurance is a way to pay for parts of that care, if you are not wealthy enough to self-pay, or don’t qualify for Medicaid.
Yes, it's expensive, saysnj.com, in the recent article, “Should we get long-term care insurance?” but it’s your only alternative.
Data from Genworth's 2017 Cost of Care Survey found the national median cost of an assisted living facility is $3,750 per month. A nursing home costs $8,010 per month. The cost is also typically more for those with dementia. According to the American Association for Long-term Care 2008 Sourcebook, more than half of people needing nursing home care require a stay of more than 12 months, with almost 25% staying more than three years. Those in the latter group, can really wreck a family's finances.
In addition, most people don’t know that Medicare only covers a very narrow set of LTC costs. Similarly, Medicaid only covers those with very limited financial resources. For all but the extremely wealthy, long-term care insurance (LTCI) is the best solution to defray the expense of home healthcare, assisted living, or nursing home care. Yes, it can be pricey.
Getting coverage when you are relatively young and still in good health helps to keep the costs down.
Some people are worried that they’ll be paying LTCI premiums for many years and die before they ever use the benefit. However, we do the same type of thing for auto or homeowners insurance. Everyone gets this coverage because the financial risk of doing without is too great.
Insurance companies have combination life insurance/LTCI policies, called "hybrids," that address the fear of wasted premiums. With these hybrid policies, provided that the premium is paid for your lifetime, you or your heirs will receive the full policy benefit, as the life insurance death benefit, the LTC benefit, or a combination.
These are complex policies with many options and reviewing them can be challenging for the layperson. Before you sign anything, review the policies with an estate planning attorney, or a trusted financial advisor who is familiar with LTCI policies.
Reference: nj.com (January 12, 2018) “Should we get long-term care insurance?”