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Insurance, Money & Investments for Seniors
What a Good Long-Term Care Policy Should Include
ElderLawAnswers has advice on choosing LTC
insurance
 August 10,2006 - As nursing home and long-term care
costs continue to rise, the
Deficit Reduction Act has made
it more difficult to qualify for Medicaid to pay for nursing home costs.
Long-term care insurance can help cover expenses, but long term care
insurance contracts are notoriously confusing. How do you figure out
what is right for you? The following are some tips to help you sort
through all the different options.
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How to Reduce Long-Term Care Insurance Costs
By ElderLawAnswers.com
July 20, 2006 - While long-term care insurance can
be a good way to pay for a nursing home stay or a home health care
worker, it doesn't come cheap. Annual premiums vary significantly,
depending on your age, health, and the type of policy, but policies can
run as high as $5,000 per year. You do not need to pay that much,
however. The following are some ways to reduce your costs.
Read more...
Women Bear Greater Share of Long Term Care Risks and
Costs
They have 60% greater chance than men of entering a
nursing home
July 18, 2006 A study by Genworth Financial has
found women were 60 percent more likely than men to enter a nursing home
at some point in their lives and may experience large financial
sacrifices in their roles as America's predominant unpaid care
providers. Read more...
Americans Less Concerned About Long-Term Care than
10 Years Ago
Yet, more believe LTC costs could significantly
reduce retirement income
July 5, 2006 - Despite the backdrop of an aging
U.S. population with increasing longevity, and spiraling long term care
(LTC) costs, Americans are less worried today than they were roughly a
decade ago about needing and paying for LTC, according to a new survey
of 1,000 people ages 21 to 75.
Read more...
Read the Four-Part Series on Long-Term Care
Facing the Long-Term (Care) Nightmare: Part 1
Dont Rely On
Medicaid For Long-Term Care: Part 2
Bridging the Long-Term Care Gap: Part 3
Understanding Long Term Care Insurance: Part 4
Read more
on
Money, Insurance & Investments |
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Find a strong insurance company. The first step is
to choose a solid insurance company. Because it is likely you won't be
using the policy for many years, you want to make sure the company will
still be around when you need it. Make certain that the insurer is rated
in the top two categories by one of the services that rates insurance
companies, such as
A.M. Best,
Moodys,
Standard & Poors, or
Weiss.
What is covered. Policies may cover nursing home
care, home health care, assisted living, hospice care, or adult day
care, or some combination of these. The more comprehensive the policy,
the better. A policy that covers multiple types of care will give you
more flexibility in choosing the care that is right for you. Another
factor to consider is how many activities of daily living (ADLs) need to
be impaired in order to trigger the policy. ADLs are things like eating,
dressing, bathing, cooking, using the toilet, maintaining continence,
and moving around. If possible, choose a policy that covers you when you
can't perform at least two ADLs, one of which is bathing.
Waiting period. Most long-term care insurance
policies have a waiting period before benefits begin to kick in. This
waiting period can be between 0 and 90 days, or even longer. You will
have to cover all expenses during the waiting period, so choose a time
period that you think you can afford to cover. A longer waiting period
can mean lower premiums, but you need to be careful if you are getting
home care. The waiting period is not based on calendar days, but on days
of reimbursable service, which can be very complicated. Some policies
may have different waiting periods for home health care and nursing home
care.
Daily benefit. The daily benefit is the amount the
insurance pays per day toward long-term care expenses. If your daily
benefit doesn't cover your expenses, you will have to cover any
additional costs. Purchasing the maximum daily benefit will assure you
have the most coverage available. If you want to lower your premiums,
you may consider covering a portion of the premium yourself. You can
then insure for the maximum daily benefit minus the amount you are
covering. The lower daily benefit will mean a lower premium.
It is important to determine how the daily benefit
is calculated. It can be each day's actual charges or the daily average,
calculated each month. The latter is better for home health care because
a home care worker might come for a full day, one day, and then only
part of the day, the next day.
Benefit period. When you purchase a policy, you
need to choose how long you want your coverage to last. In general, you
do not need to purchase a lifetime policy three to five years worth of
coverage should be enough. In fact a new study from the American
Association of Long-term Care Insurance shows that a three-year benefit
policy is sufficient for most people.
According to the study of in-force
long-term care policies, only 8 percent of people needed coverage for
more than three years. So, unless you have a family history of a chronic
illness, you aren't likely to need more coverage.
If you are buying
insurance as part of a Medicaid planning strategy, however, you will
need to purchase at least enough insurance to cover the five-year lookback period. That way you can transfer assets to your children or
grandchildren before you enter the nursing home, use the long-term care
coverage to wait out Medicaid's new five-year look-back period, and
after those five years have passed apply for Medicaid to pay your
nursing home costs (provided the assets remaining in your name do not
exceed Medicaid's limits).
If you do have a history of a chronic disease in
your family, you may want to purchase more coverage. Coverage for 10
years may be enough and would still be less expensive than purchasing a
lifetime policy.
Inflation protection. As nursing home costs
continue to rise, your daily benefit will cover less and less of your
expenses. Most insurance policies offer inflation protection of 5
percent a year, which is designed to increase your daily benefit along
with the long-term care inflation rate of 5.6 percent a year. Although
inflation protection can significantly increase your premium, it is
strongly recommended. There are two main types of inflation protection:
compound interest increases or simple interest increases. If you are
purchasing a long-term care policy and are younger than age 62 or 63,
you will need to purchase compound inflation protection. This can,
however, more than double your premium. If you purchase a policy after
age 62 or 63, some experts believe that simple inflation increases
should be enough, and you will save on premium costs.
>> For more information on long-term care
insurance,
click here.
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