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As american live longer, more of us face the potential of needing to pay for our own care outside of the hospital, many are exploring the option available through Long Term Care Insurance policy.
What is long Term Care?
Long-term Care is a variety of services and supports to meet health or personal care needs over an extended period time. Most long term care is non skilled personal care assistance, such as help performing everyday activities of daily living (ADLs) which are
- dressing,
- using the toilet.
- transferring
- caring for incontinence, and
- eating.
The goal for the LTC insurance is to maximize your independence and funtioning at a time when you are unable to be fully independent.
LTC insurance is a relatively new form of insurance. The policy was written less than 40 years ago, but since that time, we have seen literal explosion in term of the need for the care, the cost of careand the availability of quality insurance policies. Intially designed to provide nursing home care only, now LTC poilcies offer the option of nursing home care, home care, and numbers of "alternative forms of care, including assisted living and residential care facilities. Policies that provide the full range of coverage are referred to as "comprehensive" or integrated" policies. They typically provides coverages anywhere in the US while a few extended world wide.
What about my Health Insurance, medicare or or medicaid?
Many people incorrectly assume that their health policy or medicare will pay for the cost of LTC. In fact, typical health policies provide no coverages. While medicare provides a very limited amount of skill nursing care, and in total, pays for less than 3%. of cost of LTCin this country. Medicaid provides basic coverages for the indigent and poor, but only when they have spent down to the poverty level.
Why Should I buy LTC policy?
While there is no simple answer to this question, policies are less expensive for people who are healthy and younger you are, the less costly the coverages. Suze Orman, in her book, The 9 Steps to Financial Freedom, says it is the best to consider the insurance while ou are in your 50's but I personally think this is wrong. LTC policies are cheaper to purchase sooner. Benefit will increase longer you live with the rider without increase of premium. LTC needs can strike anytime in your life. Longer you wait, more expensive it will get &, more risks you will take!!!
Here are some facts why you should purchase LTC policies.
1. Auto Claim Rate 25/100. Home Fire Claim Rate: 1/100. LTC claim rates 72/100. Auto Claim 25%? vs LTC 72%. You should consider.
2. If you are 85 & older = 77% needs some sort of LTC. 22% are in nursing home. Averaging 2.7 years of Nursing home stay.
3. About 70% of individual over age 65 will require at least some type of long term care services during their life time. Over 40% will need care in a nursing home for some period time.
4. Costs of Care (aveage costs in the US are)
- $181/dayfor semi-private room in a nursing home.
- $205/day for a private room in a nursing home
- 2,714/month for care in an assisted living facility (for one bed unit)
- 17/hr for a home maker services
- 61/day for care in an adult day health care center
Tax Qualified Policy.
The cost of Certain LTC policies can be treated as a medical expenses when filing tax return. How you qualify for benefits is virtually identical among all tax-qualified policies, but varies widely among non-qualified policies. Typically, if you are self employeed, you can waiver some portion of tax on the LTC premium.
Bottom Line
Whether or not you purchase a policy is not the critical issue. WHAT IS IMPORTANT IS THAT YOU MAKE INFORMED DECISION. Call us today to find out about this important covearges to understand & achieve your future dreams and goals.
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