Long Term
Care Insurance
If 43% of the Houses in Your Neighborhood
Burned Down Wouldn't You Buy
Fire Insurance?
You Probably Would!
LONG TERM CARE STATISTICS
For
a retiree, the cost of a stay in a nursing home is very expensive, and an
extended stay can put your financial assets in jeopardy.
That is, you may need to deplete your capital to pay for a stay in a
nursing home, or have extended home-health care services.
Consider the following facts:
According
to the U.S. Department of Health and Human Services, 43% (more than 50% of
women, and nearly 33% of men, turning age 65 will require long term care in a
nursing home during their life.
Seventy
percent of all couples can expect at least one partner to use a nursing home
after age 65.
The
average cost of a one-year nursing home stay is $30,000.
Medicare
covers only about 3.6% of all long term care costs, because it provides limited
coverage for SKILLED nursing care only. Unfortunately,
98% of individuals currently in nursing facilities are receiving CUSTODIAL care,
for which Medicare pays nothing.
Over
half of all single elderly will spend themselves below the poverty level within
13 weeks following admission into a nursing home.
Fifty-six
percent of couples spend themselves down to poverty level after one member has
spent six months in a nursing facility.
Forty
percent of people over age 65 risk entering a long term care facility, half of
whom will stay six months or less, and the other half will stay an average of
2.5 years.
Clearly,
the risk of a long-term confinement in a nursing facility is one of the greatest
hazards faced by today’s retiree. These
facts explain the growing popularity of long term care and home health care
insurance policies.
WHAT A LONG TERM CARE POLICY PAYS FOR
LEVELS OF CARE
This
is a crucial factor in choosing coverage. There
are actually four categories: “skilled
care,” “intermediate care,” “custodial care,” and “home health
services.” When affordable,
coverage should be obtained that provides for all levels of care.
BENEFIT AMOUNT AND DURATION
The
benefit amount should be evaluated according to the projected need, and the
ability to pay for the care from other sources.
The length of time the policy pays benefits can range from a number of
months to life. The benefit period
should cover a majority of likely admissions.
With the average nursing home stay exceeding 2.5 years, a benefit period
of 4 years is currently recommended.
INFLATION PROTECTION
Many
companies offer benefit levels that increase by the rate of inflation or some
cost index factor. With medical
costs rising nearly twice the rate of inflation, such options may prove
valuable.
WAITING PERIOD AND PRIOR-HOSPITALIZATION
The
length of time from the onset of disability until the time when the insurance
company begins to pay is an important factor in premium cost.
For example, a one-month waiting period will have a high premium; and a
period of 3 to 6 months will have a correspondingly lower premium.
Waiting
periods should be reasonably short, 30, 60 or 90 days depending upon the
individual’s ability to pay for a short stay and the added premium costs of a
short waiting period. Do not buy a
policy that requires a hospital stay to be eligible for benefits. You should be able to collect even if you directly entered
the nursing home.
COVERAGE LIMITATIONS AND QUALIFICATIONS
Benefits
should be paid for all medically necessary confinements and use reasonable
definitions, or ADL’s (activities of daily living) to qualify for coverage.
Alzheimer’s and other organic conditions that are not medically
“verifiable” should specifically be covered and written in the policy
wording.
GUARANTEED RENEWABLE LEVEL PREMIUMS
Make
sure you can renew your policy for as long as you need it, and that the
insurance company guarantees this provision.
Many better policies contain a guaranteed renewable provision.
We recommend that you obtain a policy with this provision.
WAIVER OF PREMIUM
Better
policies waive the necessity to pay premiums while you are receiving benefits.
Look for policies with this provision.
PRE-EXISTING CONDITIONS AND ELIGIBLE FACILITIES
Most
policies delay coverage for medical conditions that occur before, or are present
at the time of application. Look for the shortest delay possible.
Make
sure the policy pays for confinement in a State Licensed Facility and that it
does not require Medicare approved facility.
Key Benefits
and C