Is long-term care (LTC) insurance worth the investment? Deciding whether to spend your savings on long-term care insurance, or just accept the risk yourself is a common problem faced by many people. If you never need LTC, you could save thousands, and if only your partner needs care, your joint savings may be enough to cover the expense. Before you take out LTC insurance, here are six important factors to consider.
- Consider Getting in Early
Purchasing LTC insurance in your 40s or 50s may seem premature. However, according to AALTCI, 80% of policies are bought by people aged between 45 and 64. By purchasing coverage early, when you have fewer health concerns, you can increase your chances of qualifying and lock in a cheaper premium. According to the 2017 America’s Health Insurance Plans report, individuals aged over 75 paid on average $2,617 more in annual premiums than those aged between 55 and 64. The findings also indicated that adults those aged 70-years had a 30% greater chance of being denied coverage than a 50-year-old.
- Consider your Medical History
Your need for LTC insurance is mostly dependent on your health and medical outlook. Do you have a family history of health conditions, such as Alzheimer’s disease, cardiovascular disease or diabetes? Do you smoke, or do you keep active and maintain a healthy diet? If the chances are historically, or even statistically likely that you’ll need LTC, and you have assets to protect, you’ll want to take out sufficient coverage. It’s also advisable to obtain life insurance early, when you are still insurable, as this can be the best option for protecting your assets.
- Consider Spousal Discounts
Are you married? Many insurance companies offer spousal discounts when couples apply for joint LTC coverage. Depending on the insurance provider, the discount can range from 25-35%. Couples can also take advantage of additional benefits, such as a spousal waiver of premium benefit. For example, if one spouse is receiving benefits within an assisted living facility, nursing facility, or at home, the insurance company waives the premium payments for both spouses. This benefit is particularly beneficial when there is one breadwinner and affording premiums would be difficult if one spouse was out of work. Married couple also have access to a Survivorship Benefit, which drops all future premiums for a surviving partner as long as both policies have been in effect for a certain period.
- Consider the Cost of LTC
Long-term care is becoming increasingly expensive and is generally not covered under private health insurance plans or government programs. According to Genworth, the average monthly cost of a Home Health Aide was $4,099, while a semi-private room in a Nursing Home was $7,148, the equivalent of more than $85,000 per year. Looking at the typical costs of LTC, it’s easy to see how a stay in a nursing home could quickly deplete your savings. A good LTC insurance plan will cover at least 90% of the costs.
- Consider Whether You Qualify for Medicaid
Medicare only covers a small percentage of a short stay (max 100 days) in a skilled nursing facility and does not include custodial care services, such as bathing assistance or dressing and getting out of bed. On the other hand, Medicaid covers a full range of services, although few people qualify as their income and assets are well above the threshold. To find out whether you are eligible for Medicaid, you can check on the Department of Health and Human Services website.
- Consider Improved Access to Health Care
Often people make the mistake of assuming long-term care insurance is only to cover stays in nursing homes. However, LTC insurance covers a full range of long-term care services whether they are received at home, or within an assisted living facility or skilled nursing home. A good LTC policy will include in-home assistance such as help with dressing and bathing, as well as home modifications like wheelchair ramps and bathroom rails. It should also cover homemaker services, such as cooking, cleaning, and transportation. Many of these benefits are designed to extend independence and allow older adults to remain in their own homes for longer.
Is Long-term Care Insurance Worth it?
Figuring out whether long-term care insurance requires a lot of research and analysis. The answer is different for each individual and couple. Those who lack the income and assets to afford long-term care will receive coverage through Medicaid, while those that can afford the costs of long-term care don’t necessarily need to pay premiums to protect their assets. It can be difficult to determine if its right for you. If you need assistance, Your Insurance Gal is always available to help!