Everyone should eventually add a long-term health care policy to their private health insurance and retirement needs. It’s most likely the important retirement planning you ever do–even if you don’t need it.
People are living longer. Over half of those who are 65-years-old today will need long-term care at some point of life. However, long-term care insurance is often considered to be just a nursing home insurance because it covers those who need help with basic tasks like bathing and eating.
Of course, no one wants to think of themselves as old and infirm, let alone spending the end of their life in a nursing home. This unpleasant probability possibly explains why so few people (presently only 4.5 million individual policies are in force) buy long-term care insurance. Yet, less than 15 percent of long-term care is in a nursing home situation.
Ironically, it is this type of insurance that can actually keep people out of a nursing home. A long-term care insurance policy is much more than a nursing home policy. It typically covers some or all of the costs of assisted-living facilities and home care situations, as well as the traditional nursing home care. It can cover the care for someone dealing with a chronic health condition that needs assistance with basic daily living.
What to look for in a long-term policy:
- Policy costs vary widely from state to state. Base your costs are where you plan to retire, instead of where you’re living now.
- Such policies are not cheap and you can slash prices by buying at an younger age. Financial experts suggest that when you turn 50 to start looking for a policy. A good goal to set for purchasing a policy is age 58. Don’t leave it off for too much later because half of policy applicants in their 70s or 80s are denied coverage for health reasons.
- Financial experts suggest that a “short, fat policy” (good coverage for a shorter time period) is better than lean coverage for a lifetime. A 20-year study indicates that only 10 percent of claimants need long-term care for more than five years.
- Check to see if your state offers a long-term partnership plan. These plans protect some or all of your assets being depleted before being considered Medicaid-eligible. You can turn to Medicaid, if your private coverage isn’t enough, without spending down your assets.
- Look into a hybrid option where life insurance is combined with long-term care. If you don’t use the long-term care, the money rolls over into your death benefit.
- You can save 10-30% percent if you and your spouse buy policies together.
- Make sure (as much as you possibly can) that you’re insuring with a company that will be around in 30 or 40 years. Stick with insurance companies of a high financial strength ration. You can check on companies’ ratings through StandardAndPoors.com or Moodys.com.
Long-term health care is a protection. You are protecting yourself from the only thing worse than long-term care, which is needing it and not being able to afford it.
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