Do I need Long Term Care Insurance?
What Does Kiplinger Say?
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If you live in Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas or Virginia, you can call 1-800-229-7141. This is the number of the Long Term Care Insurance Division of National HealthCare Corporation in Murfreesboro, TN.
For individuals living in other states, contact several insurance companies in your area and compare quotes using the following information as a guide.
Your Financial Health Is Important, Too!
You insure your home, your health, your car and even your life. And you carefully plan your savings and investments for retirement. But all of those plans could be for nothing if you or your spouse should need long term health care, one of the largest expenses older Americans face.
The fact is, the longer you live, the greater the chance you will need some form of long term care, such as extended care in a nursing home or through a home health agency. When you look at the facts, it is easy to see that financing long term care is a serious problem facing the nation. As our population grows proportionately older, the problem will only worsen.
Financing of Long Term Care
Medicare is limited in the number of days it will pay for nursing home care - up to 100 days. Medicare pays 100% for the first 20 days (after the 3 day hospital stay and only if skilled care is needed), beginning on day 21-100 there is a daily co-payment required with Medicare. Most Seniors have a Medicare Supplement policy. Medicare supplements will pay in conjunction with Medicare. Once Medicare stops paying for care, most supplements will not continue to pay.
The federal government has instituted restrictions on the transferring of assets out of an estate to qualify for Medicaid. When you apply for Medicaid, any gifts or transfers of assets made within five years (60 months) of the date of application are subject to penalties. Any gifts or transfers of assets made greater than 5 years of the date of application are not subject to penalties. A law was passed in 1996 making it a crime to shift assets to become eligible for nursing home Medicaid coverage.
A drawback with Medicaid is limited choices of where to receive care. Not all nursing homes accept Medicaid patients and depending on the state in which you live, Medicaid may not pay for assisted living centers or home health care.
Most financial planners recommend that LTC insurance be purchased in your late 50′s or early 60′s. In this range the cost is quite affordable and your health is probably still pretty good. The premiums are based on your age, health, and the type of plan that you purchase.
The primary reason people are purchasing long term care insurance is to maintain choice, and consequently, independence.(7)
If you are the type of person who enjoys being in control, a long term care insurance policy may be the only thing that makes it possible for you to stay in control by guaranteeing that you will have decision-making power when you need long term care, such as choices other than a nursing home - assisted living, home health care, adult day care, etc.
So, don't pass the buck. Stay in control of your life by taking responsibility for your own long term care by purchasing a long term care policy - the private sector's solution to the real health care crisis.
LTC Insurance Benefit Considerations
When purchasing LTC Insurance you must make three main decisions, and a few optional decisions. These decisions, along with your age and health determine your premium:
Daily Benefit - the amount of money you will receive from the insurance company on a daily basis for your care. You usually can select between $50 and $300 per day. Find out what the current cost of care is in your area and it will help you make the decision as to what daily benefit you want. (also see inflation protection below).
Home Health Care Coverage - most policies will also give you the option of receiving insurance benefits in your own home. This will allow you greater choice as to where your care can be paid for by the insurance. It may cover community care like Adult Day Care Centers as well as care in the home.
Benefit Period - the length of time you will receive payments from the insurance company once you need care. You usually can select a specific number of years (ie: 2,3,4,5). A three year plan will be less expensive than a five year plan.
Elimination Period (deductible) - the number of days that you will be responsible for paying for your care before the insurance begins to pay. This works like most insurance deductibles except it is stated in a number of days instead of dollars. Most plans have options like 90 days or 180 days. Be sure to check if this deductible is once in a lifetime or if it can repeat.
Inflation Protection - this ties back to your daily benefit and allows it to grow on an annual basis to help keep your plan in step with inflation. It is built into your original premium and therefore will increase your annual premium. You do not have to add this to your plan - but it is certainly recommended if you are under age 80.
Nonforfeiture - this option provides some form of paid-up benefit if the policy should lapse. This option increases your base premium.
We hope this will give you some direction when comparing LTC policies. Always look for a strong and reputable company and also make sure your agent is knowledgeable about long term care issues as well. Shop around and educate yourself and use your best judgment when selecting a plan. Remember, if a plan sounds too good to be true based on price - it may be. Premiums can be raised in the future if the company raises rates on an entire group of policyholders.
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