When you consider the aging population, including the Baby Boomers, and that one of two women and one of three men over the age of 65 will need long term care at some point in their lives you can see how long term care insurance, or LTC insurance, can be vital to the financial peace of mind of the elderly and their families. Seven out of ten who have reached the age of 75 will require long term care.
The elderly are not the only segment of the population that requires long term care in the home. 40% of those using long-term care in the United States are between the ages of 18 and 64. The costs of long term care can be disastrous to those without a LTC plan in place.
According to AARP (American Association of Retired Persons) the national average daily cost for private nursing long term care is $150. This doesn’t include the costs for therapy, rehabilitation or medications. The long term care costs also vary from state to state. You can check for your state’s average cost for long term care on their website.
Very few of us plan on being taken care of in our own homes or through home care services and nursing homes. Because long term care and insurance for this care is not planned on it usually is left to be decided on after a traumatic accident or diagnosis of a severe health issue such as Alzheimer’s, Parkinson’s disease or other illness or accident that results in the loss of the ability to care for oneself.
Many times the cost for long term care or for nursing homes can exceed a person’s yearly income. If insurance for long term and home care isn’t provided for, family members are left to carry the brunt of the costs themselves, often devastating their finances. Medicaid and Medicare can pay for some homecare costs or nursing home costs, but contrary to popular belief these public health plans do not pay for long-term care.
According to ElderCare Online LTC or extended care insurance has four key areas to consider and compare:
- The benefit period, which is the length of time that the insurer will pay for care after a claim has been filed. This coverage period can be anywhere from one year to a lifetime.
- The daily benefit, which is the maximum dollar amount or percentage amount the insurer will pay for care, each day, during the coverage period. These insurance benefits can range anywhere from $30 to hundreds of dollars a day.
- The elimination period or deductible, which is the length of time and the amount of money that must be paid out-of-pocket before the insurer starts to pay. This could be a day to a year.
- The level of inflation protection, which is the amount your benefits will increase over time to keep up with inflation. A hundred dollars today might be adequate but in 10 years it may be too little.
As with any insurance purchase, shop around and compare the best rates. Find out if the insurance company has financial strength to meet your needs when you file claims. You can find out about insurance ratings here.