Our futures are unpredictable, but the good news is that advances in medicine are enabling Americans to live longer and fuller lives. Unfortunately, this also means that the possibility of living with a chronic health condition has increased as well.
Many chronic health issues will require extended care. With the average private-pay nursing home stays running about $80,000, it has become more important than ever to take preventative action to protect your health and your future.
Let’s take a closer look at how Long-Term Care insurance can help you offset the cost of extended care.
What is it?
Long-term care covers many forms of medical care, including personal medical assistance as well as social support services for individuals who are mentally or physically unable to care for themselves independently for an extended period of time.
Who needs it?
Determining who might need long-term care insurance involves taking several factors into account, including: health status, age, income, assets, and retirement goals.
According to the Health Insurance Association of America, the average age for those purchasing long-term care insurance is 62. But purchasing a policy at a younger age will lower your premium significantly. Even though you may be paying for a longer period of time, taking out a policy earlier offers the peace of mind of knowing you have coverage. Also, the cost typically evens out over the life of the policy when compared to a policy taken out after the age of 65.
How much does it cost?
The rates for long-term care insurance vary based on the size and type of accommodations, region, services available, amenities, and quality of care. But by comparison, the potential costs of long-term care without insurance are quite high. In 2012, the average private-pay cost of nursing home care was $90,520 for a private room and $81,030 for a shared room. For at home care, the private-pay cost was $21/hr, or $84 for four hours, and averaged $42,600 per year. (MetLife Market Survey of Nursing Home & Assisted Living Costs)
What’s the difference between long-term care insurance and disability?
There are some key differences between the two types of insurance. While it’s true that long-term care insurance evolved from income disability insurance, they actually function quite differently. Disability provides a limited amount of recuperative time and replaces the salary at the time of the injury but not the care. It also requires the policyholder to pay for ongoing care out-of-pocket. Long-term care insurance covers two years or more and covers all related care expenses.
It’s also worth noting that Medicare is not a sufficient resource to cover long-term care expenses. Medicare has a cap of 100 days of reimbursed care expenses with the total repayment averaging only 28 days.
A long-term care insurance policy can cover any or all of the following services:
- Personal care coverage
- Home health care coverage
- Nursing home coverage
- Adult day care center coverage
- Assisted living facility coverage
Typically, a long-term care insurance policy will pay a daily maximum and a lifetime maximum benefit. You can choose the actual benefits when you purchase your policy.
Did you know that carrying a long-term care insurance policy can offer a potential tax advantage?
Call ERM Insurance Brokers at (949) 222-0444 to learn more!