Long-term or long-term care (LTC) insurance reimburses for the cost of nursing home and other services when you lose the ability to perform your daily activities such as bathing, dressing and feeding. LTC insurance is relatively new in the market. But it has been gaining popularity in recent years, mostly driven by the escalating cost of nursing home stays.
What is Covered?
Eligible expenses covered under LTC insurance may include nursing home stays, respite care, assisted living facilities, adult day care and home health aides. However, different insurance policies may differ in the types of services covered. LTC insurance can be thought of as an extension of your medical insurance. Prescription drugs and hospital stays that are typically covered by Medicare and commercial health insurance plans are excluded from LTC policies.
Is LTC Worthwhile?
The major benefit of having LTC insurance is that it helps you and your family protect your assets against expensive LTC costs. In some cases, it helps to extend the duration of the nursing home stay, or make it affordable to have a private room in a nursing facility. The bottom line is that it allows you the freedom to choose high-quality LTC and gives you peace of mind.
Who Needs LTC?
Anyone who can afford LTC insurance should have it. According to the Centers for Medicare and Medicaid Services, 60 percent of individuals aged over 65 will need some type of LTC, and that 40 percent will require nursing home care. Many of us are insured against auto thefts and home fires that are statistically much less likely to occur than LTC needs. The average woman has more LTC needs than a man because women tend to live longer and are more likely to live alone.
When to Buy LTC
The best time to purchase LTC insurance is when you are middle-aged and in good health. At this stage, your monthly premium should be relatively affordable. The older you are, the higher the likelihood of developing a chronic illness that may render you uninsurable. Many insurance underwriters do not sell LTC policies to those 80 years or above.
How to Choose a Policy
Choose a policy that is comprehensive (covering a broad range of LTC services) and tax-qualified (premium paid tax-deductible depending on income and benefits received non-taxable). Inflation protection is an important provision to look for because it ensures that the amount of benefit increases with time to keep pace with rising nursing home costs. You will also be asked to select an elimination or waiting period that suits your needs. This is the period of time you have to pay out-of-pocket before your insurance kicks in. Consider your available resources when you select the elimination period. Finally, shop around and make sure you understand all the terms in the policy before you commit to it.
Member Comments