Have you ever worried
about medical costs consuming your savings?
Rising medical costs and longer life expectancies are making this a concern
for many. There are some government programs like Medicaid and Medicare
that can help cover some expenses of long-term care. However, there are
restrictions on what is covered and qualifying for these programs may
only be possible after you have used all your personal savings.
With long-term care
insurance, you will be in a better position to get the care and services
you need. You will have a greater opportunity to choose the type of care
you want. You can protect your other assets and be in a better position
to leave assets to heirs when you pass away. You will be in more control
of your financial future.
The Costs of Long-term
Several studies have found that a year's stay in a nursing home can cost
over $50,000. Even the cost of having a skilled professional come to your
home and provide care three times a week can be over $15,000 annually
depending on what type of care you need. While life expectancies are increasing,
amount of care we need (and its cost) seems to be increasing even faster.
Paying for Long-term
Neither Medicare nor private medical insurance cover most long-term care
costs. Medicare will pay for some special services, but most people receiving
long-term care need help with things not covered, like bathing, dressing
and eating. In most cases, Medicare does not cover these.
Medicaid will cover
nursing home care, but it functions like a safety-net type program. To
get Medicaid help, you must meet federal and state guidelines for income
and assets. Many people start paying for care out of their personal assets
and then qualify for Medicaid when their personal assets are depleted.
While some assets and income can be protected, by the time you qualify
for Medicaid, you will probably have used up most of the assets you had
hoped to pass on to surviving family members.
insurance is another way to pay for some or all of your long-term
care. This type of insurance was introduced in the 1980s as nursing home
insurance but now covers a great deal more. The greatest benefits of these
policies are that they enable you to make more decisions about your care
and they help protect your other assets.
1. Usually, age 50 is the time to consider a long-term care policy. Younger
than that, you probably do not need it and older than that, you may have
a condition that could prevent you from qualifying or result in higher
premiums. The earlier you buy the coverage, the lower the premiums.
2. Be sure the insurance company is financially sound. You may qualify
for benefits for a long time and you want the insurance company to be
around. You can get ratings reports from your agent or at the library
on insurance companies.
3. Review what types of expenses are covered by the policy. Some policies
provide coverage for only some services, a limited period of time or only
up to a certain total dollar limit. As you would expect, the more services
covered, the higher the premium.
4. Get the coverage you need. Many experts suggest at least three years'
coverage. While three years in a nursing home today may cost $150,000,
be sure the policy you are considering protects you against medical cost
5. Review the elimination period. This refers to the amount of time between
you start receiving care and when your insurance starts paying.
6. Be sure to understand what makes you eligible for benefits.
7. Make sure the policy is guaranteed renewable. This does not necessarily
mean that your premiums will not rise. It does mean you can still get
Long-term care insurance can be a critical part of your overall financial
plan. If you have substantial assets and do not want to rely on Medicare
or Medicaid, you should consider it. When shopping for a policy, talk
to several companies, ask a lot of questions and be sure to understand
all the terms of the policy.