Long term care insurance is designed to protect you and your loved ones in the event that long term care is needed. Nearly one out of every two persons who are age 65 and older will likely spend some time in a nursing home. The average dollar amount for nursing home expenses per year is $30,000. However, if you live in a major metropolitan area the average costs rises to around $60,000 and in some cases as much as $100,000.
The average stay of a senior in a nursing home is around nineteen months which means those seniors who live in a major metropolitan area would spend $100,000 in long term care in addition to medical expenses and prescriptions. If you have aging parents, or perhaps you are now a senior citizen, long term care insurance may be something you need to consider, because once consumers need the benefits of a long term care policy, they may be physically, emotionally, or mentally disabled and not in a position to assert their rights.
Understanding the jargon of the long term care insurance business and the comparing policies of different companies is essential in order to insure you get the coverage you desire.
IS LONG TERM CARE COVERED UNDER MY HEALTH INSURANCE?
Health insurance and its supplements are not designed for long term care and will not cover nursing home expenses. Medicaid is a welfare program that acts as a safety net for health care but does not address long term care and will not cover long term expenses for the average American. Medicare, although it does allow for skilled nursing care under certain eligibility requirements, also has limited care. Without long term care insurance, families and individuals must tap into their savings, assets and cash to pay the expenses incurred for long term care.
WHAT DOES LONG TERM CARE INSURANCE COVER?
Most long term care insurance policies offer coverage in the following four basic areas.
1. Rehabilitation training at home or in a nursing home
2. Skilled nursing administered either at home or in a long term care facility
3. Daily needs such as eating, bathing, dressing
4. Care of those with a cognitive impairment such as Alzheimer’s
HOW DOES LONG TERM HEALTH CARE INSURANCE WORK?
Like any insurance product, the insured pays a premium for long term health care insurance in order to protect against the high expenses of a health condition that necessitates long term care.
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When purchasing long term care insurance there are different options that a buyer should be aware of.
Choosing Coverage. Many Long-term Care policies offer an option that allows you to choose whether you want coverage only for nursing home care, or only for home care. Or, you can elect to choose coverage that allows for a combination of care options that includes day care for adults, nursing home, and assisted living. You may also wish to choose another option provided by some long term care policies that allows for a friend or a family member to be paid to care for an individual at home.
Choosing Benefits. The length of the benefit period in which you will receive benefits from your policy is determined by you. You may choose to receive benefits from two to six years, or you may wish to be covered for the rest of your life. Also to be considered is the amount of money an insurance company will pay on a daily or monthly basis. This is important to keep in mind as any care expenses that exceed the designated daily or monthly amount of your benefits will have to be paid out of your own pocket.
Protection against Inflation. Long term care insurance policies offer two main types of inflation protection: automatic coverage increases and the ability to add coverage at a later date to your present policy. As health care costs continue to rise year after year this is a very important feature to consider or you might find out in the future that your policy does not cover a good portion of your expenses.
Waiting Period or Elimination Period. During this period, which could last from zero to a hundred days, all long-term health expenses must be paid by you. However, the longer your waiting period is, the lower generally your premiums will be.
Protection against Insurance Cancellation. Policies that carry a Non-Forfeiture Benefit will continue to pay the expenses for your care even if you stop paying your premiums. Premiums cost could be from 10 percent to 100 percent higher if you choose this feature.
WHAT ARE SOME OTHER IMPORTANT FEAUTRES I SHOULD LOOK FOR IN A LONG TERM CARE POLICY?
– Contains a one time deductible for the life of the policy
– Permits you to choose a policy with less coverage if you cannot afford your current premiums
– Requires NO time spent in the hospital before you are eligible to receive benefits
– Cannot be cancelled as long as you continue to pay your premiums
– Has a feature which includes coverage for dementia
WORDS TO THE WISE
Rely only on what you read and understand in the policy. Taking a sales agent’s word could mean a claim that is submitted in the future would be denied on some point you did not understand.
Do not buy a policy until you fully understand all of the policy’s terms. If need be, hire someone who can and will make sure you are making an informed decision.
If you choose not to get a legal opinion, deal only with a respected and established insurance brokerage firm that has shown itself reliable in your community for many years. The advantage of dealing with an insurance broker is that he is an independent agent for many insurance companies and he will be able to explain the advantages and disadvantages of various policies in the marketplace.
When buying long term care insurance make it a family decision. Bring everyone together who has an interest; your spouse, your children your siblings, a close friend. Having the input of those who care about you can help you avoid some of the pitfalls in choosing long term health care insurance.