Filling The Gaps With Insurance
Week 4- Long-Term Care Insurance
Long-term care (LTC) insurance policies vary greatly, but the purpose of LTC insurance is to insure against the financial risks associated with aging, specifically those related to a long nursing home or assisted living stay.
In general, most employer-offered health insurance does not cover LTC expenses. Medicare only pays for short-term skilled care. So what happens if you find yourself as an aging person in need of long-term nursing home care? Unless you qualify for Medicaid or have LTC insurance, the costs for this care will come out of your pocket.
The average annual cost in 2011 of a semi private nursing home room was $78,110; assisted living in KY was $37,140.
You have several options when purchasing a LTC insurance policy, such as:
– Cover only nursing home stays, or home care only, or purchase coverage for a whole range of care (assisted living, adult day care, as well as nursing home and home care).
– The daily benefit (the amount the insurance company will pay each day for your care can range from $50 – $400/day, so you don’t pay anything if your care is less than the specified amount. If your daily care cost is more than the specified amount, you pay the difference).
– Benefit period (how long the insurance will pay benefits; generally 2 – 6 years or for your lifetime).
– Elimination period (time at the beginning of your care before the policy begins paying benefits; this is the period during which you pay all expenses yourself; can be 0 – 100 days).
– Inflation protection (keeps the payment amount from being eroded by inflation by the time you need this benefit).
LTC insurance can be purchased from insurance agents/brokers, financial planners, banks, employers and large membership organizations.
As you get older, the chances of needing LTC increase, as does the cost of LTC insurance. However, if you buy LTC insurance when you are too young, you will pay lower premiums, but you will be paying the premiums for a longer time period. So when should you purchase LTC insurance? The answer to this question will vary from person to person, so we recommend you consult with a financial advisor about your specific situation to decide if and when you should purchase a LTC insurance policy.
LTC insurance is explained in more detail at www.aarp.org, including what to look for in selecting a policy and how much a policy will cost. Search “Long Term Care Insurance.” You can order the “free” consumer guide from the Kentucky Department of Insurance either by calling toll free 1.800.595.6053, or via the website at http://insurance.ky.gov and click “Publications.”
Prayer Focus: Take a few minutes to pray for guidance on your and your family’s LTC insurance needs.
Next Week: Giving Through Life Insurance