When it comes to your health, you don’t have a crystal ball to look into the future, but most Americans are living longer and healthier lives thanks to advances in medicine and preventive care. While that is welcome news, it also means there is an increased risk of living with a chronic health condition that will require extended care. With the average private-pay nursing home stay costing $80,000, a long-term care insurance policy allows you to offset the high cost of extended care due to accidents, illnesses or advanced age while protecting your personal assets.
Long-term care insurance protects individuals against incurring large out-of-pocket expenses by paying affordable premiums. Individual policies are ideal for those who want an increased level of financial protection should they need help performing the activities of daily living due to an accident, illness or injury.
What is long-term care and who needs it?
Long-term care refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period of time. Whether you need long-term care insurance depends on your age, health status, overall retirement goals, income and assets.
Who should consider long-term care insurance?
According to the Health Insurance Association of America, the average age at which people purchase long-term care insurance is 62. However, purchasing a policy at a younger age typically means policies’ premiums are much more affordable. While you may pay for a longer period of time, taking out a policy around age 50 allows you to enjoy the peace of mind in knowing that you are covered. This often evens out the cost of coverage over the life of the policy, as compared to a policy taken out over the age of 65.
What is the cost of long-term care?
According to the MetLife Market Survey of Nursing Home and Assisted Living Costs, long-term care can be costly. In 2012, the average private-pay cost of care per year in a nursing home was $90,520 for a private room and $81,030 for a shared room. The average private pay cost for a home health aide to provide care at home was $21 per hour, or $84 for a four-hour visit. Assisted living rates also averaged $42,600 per year in 2012. Rates vary, depending on region, size of the accommodations, services available, quality of care and amenities.
How does long-term care differ from disability insurance?
Although long-term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long-term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury, and not the care. The policyholder will then have to pay out-of-pocket for any ongoing long-term care due to his/her accident or injury (learn more details at mickleandbass.com/workers-compensation-lawyer). In addition, Medicare should not be considered a resource for handling any substantial long-term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days. This will not suffice, as long-term care can be expensive.
A long-term care insurance policy covers any or all of the following types of services:
Nursing home coverage
Assisted living facility coverage
Adult day care center coverage
Home health care coverage
Personal care coverage
Most policies pay a daily maximum benefit and a lifetime maximum benefit. Actual benefits are chosen at the time the policy is purchased. The daily maximum benefit for most long-term care insurance policies is usually less than the cost of one average day of long-term care service. Call us today at 712-263-3193 to learn more about your coverage options, potential tax advantages and how a policy can help you to protect your financial future.
The information provided herein is not intended to be exhaustive, nor should it be construed as advice regarding coverage. Eligibility for coverage is not guaranteed and all coverages are limited to the terms and conditions contained in the applicable policy.