While making plans for the care you may need in the future, don’t forget to consider long term care insurance. Long term care insurance helps cover some costs of long term care, which may become necessary for as much as 70% of the population over age 65. Whether you experience gradual decline of abilities or suffer a sudden illness or disability, long term care services are available to improve the safety and independence of those who are not able to perform everyday tasks on their own. Long term care insurance also pays some expenses for people diagnosed with a chronic illness such as Alzheimer’s disease, Parkinson’s disease, multiple sclerosis and diabetes. But how can you afford these services?
Long term care services can include such things as help with bathing, dressing, eating, transferring (such as from bed to chair), using the restroom, grooming, housework, pet care, transportation, taking medications, shopping for food, clothing and other necessities. You can receive these services at home, in a senior community, in an assisted living facility, a continuing care community or nursing home. Wherever you choose to live, you likely will need assistance with some of these costs. Insurance and Medicaid may pay for some services. (Medicare and health insurance policies usually do not pay for any of these services.)
Long term care insurance options
There are many long term care insurance options available, so be sure to do your research when selecting an insurance. Some policies only cover nursing home care while others cover many other long term care services. Make sure you read each policy carefully; then ask your questions. It is a good idea to compare at least 3 insurance companies to ensure you are getting a good policy that fits your needs, and don’t be pressured to buy more than 1 policy because your coverage won’t necessarily be better. Here are some questions to get you started.
- Do I need long term care insurance? If you have little or no retirement savings or are already receiving Social Security, then you may not need long term care insurance. You likely can qualify for some state aid.
- Are you eligible to purchase a policy? How will I qualify for benefits?
- Which services does the policy cover, and what doesn’t it cover? (Nursing care, home modifications, adult day services, etc.)
- Where will the policy cover? (In-home care, adult day services, assisted living, nursing home, etc.?) If you move, will you still be covered? What about moving to another state?
- Why would the insurance company deny my coverage?
- Cost? Be sure that costs are no higher than 10% of your retirement income. Be sure there are no hidden costs and ask about premium increases. Premiums usually are based on the age at which you purchase the insurance and, of course, which policy you buy.
- How much does the policy pay?
- Am I required to pay premiums if I am receiving benefits?
- What if I can’t pay the premiums at some point?
- Are you required to use specific agencies for caregivers?
- Will benefits reflect inflation over the years?
- Is the company reliable, reputable and licensed to sell insurance in your state?
- Are pre-existing conditions excluded from coverage?
Make sure all of your questions are answered and then compare each policy before deciding which one is right for you. Don’t be afraid to seek help from a family, friend or other trusted resource.
Think you are too young to plan for long term care? Wrong. Many experts agree that the best time to purchase long term care insurance is when you’re healthy and young; it’s when you will most easily qualify. In fact, for many policies there is a rate increase at age 60. The safest bet is to do your research and speak with experts and your financial advisor to find the best long term care insurance for you.
Resources
National Association of Insurance Commissioners
Medicare.gov
