Long-term care consists of a variety of services that includes medical and non-medical care to people who have chronic illnesses or some other disability. Long-term care helps them meet their health and personal needs. In most cases, long-term care assists people with supportive services in performing daily living activities, such as bathing, dressing, and even using the bathroom. These services can be provided at home, in nursing homes or other types of assisted-living centers.
Do You Really Need It
While you may never need long-term care, there is a chance you just might. In 2007, nearly nine million men and women over the age of 65 needed some form of long-term care. That number is expected to go up to 12 million by 2020. While the vast majority of the people who receive these services tend to be seniors, non-seniors use these services in the event of a debilitating accident or some other tragic occurrence.
How Much Will It Cost You
Without long-term care coverage, the cost can range anywhere from $75 to $225 a day depending on the quality of service and locality. Therefore, you can pay as little as $27,375 or as much as $82,125 annually. As you see, these services are quite pricey. Keep in mind that Medicare and even some health care insurance policies will only cover 100 days of care or less depending on your age and specific circumstances. (Be sure to check with Medicare or your health insurance provider to be sure.) Purchasing long-term care insurance can substantially reduce the cost to you directly. On average, depending on your age, coverage can range from $600 to $8,000 annually.
While there many considerations when buying long-term care insurance, there are five key factors that primarily determine the cost of your policy. These factors include: Your Age, Benefit Period, Elimination Period, Daily Benefits, and Inflation Riders:
- Your Age – As with most insurance, the younger you are when you get it, the lower your annual rates. Some financial planners may recommend you get it in your 30s and 40s, while others say in your 50s while you are still healthy. However, if you wait until you are 60 or older, the premiums will be a lot higher. However, if you start paying annual premiums when you are a lot younger and do not use the benefits until your 70s, cumulatively, you may actually pay more than if you would have waited until you were older.
- Benefit Period – This is the length of time you want your policy to pay benefits. For example, you may want two, three, five years or more of coverage. This affects the price of your premium. Because the average stay in a nursing home is 2.5 years, five-year premiums are often the most popular choice.
- Elimination Period - This is the actual number of days before your benefits begin after you start receiving care. Depending on your preference, your benefits can begin immediately or be delayed for the first 90, 120 or 180 days or more. The longer your elimination period, the lower your annual premium will be. You should try to schedule your elimination period based upon when your Medicare expires, which is usually around 100 days.
- Daily Benefits - The benefit represents the amount your insurer will pay to cover your daily care. In home care, this can be as little as $75 a day or substantially more. Nursing homes can run $150 or more a day depending on location, amenities, etc. Selecting a lower daily benefit can help keep your cost down; however, it is important that you adequately cover yourself.
- Inflation Riders – This rider is a protective feature that allows for an annual increase in your daily benefit to keep it in sync with rising inflation costs. Without this feature, a $150 daily benefit today would cost $375 20 years from now.
How to Claim Benefits
To claim your coverage benefits, you must simply have a qualified medical physician inform your insurer that you are unable to meet basic living needs for an extended period. These living needs are referred to as activities of daily living (ADLs) and they include: bathing, dressing, using the bathroom, bladder problems, moving from a bed to a chair and even eating. Once your insurer verifies that you are not able to perform ADLs, receiving most benefits will require that you work with a trained professional care giver.
Final Thoughts
Long-term care coverage can really help you in the future when you need it. As US life expectancies continue to grow, the need for this coverage will continue. Talk with your financial planner and be sure that he or she devises a plan that helps to provide the coverage you need while also protecting your assets. Without long-term care coverage, the money to pay for these services will be coming from your retirement savings and assets. This can drastically take away from your quality of life in your senior years.
