With the progress of medical technology, people are living much longer than ever before. The number of Americans age 65 and older are increasing more rapidly than the rest of the population. The number of those at 85 years or above is growing even faster and they are spending more time in nursing homes and other care facilities. The help from Medicare and Medicaid programs may not sufficient to meet all the health care needs in old ages. A long term care insurance policy provides coverage for this risk. ...
According to some studies, the average lifespan of a person born today will be about 10 years more than the one born in early 1950's; 75 versus 66 for a male and 80 versus 70 for a female. Even with the help of Medicare during the old age, one still has to pay for a portion of the health care services. Since the number of working years has not significantly increased to earn for a longer duration and save for the old age health care expenses, one needs to plan in advance and save more for the care during old age. This increased longevity coupled with the tightening of Medicaid eligibility by Congress is causing people a lot of anxiety. ...
The cost of long term care which includes nursing home care, assisted living, and home health care is rising at a rate close to twice the rate of overall inflation. The current average cost of one year in nursing home runs to about $70,000 while average hourly rate for a home health worker is about $18-$20 per hour, which can add up to $35,000 - $40,000 annually. It is believed that a 65 year old retiring today, may need about $200,000 for the next 10 to 15 years for health care expenses on top of the Social Security and Medicare benefits. Traditional healthcare plans and Medicare generally do not cover these expenses. For example, Medicare supplemental policies issued by private insurers do not provide coverage for extended care. This is why, you need to consider buying a Long Term Care Insurance (LTCI). Additionally, Medicare does not cover most of the services offered by LTCI and Medicaid is somewhat restrictive. Besides, there is also a tax incentive. The tax deductible limits for LTCI premium varies from $270 to $3,400 depending upon the age.
Long term care insurance offers financial support in paying for necessary long term care services such as:
HIPAA requires the long term care policies to be guaranteed renewable. What it means is that if during the policy, the insured person develops a serious condition, the insurance company can not deny the renewal of the policy. The only exclusions to this policy are the illnesses arising out preexisting conditions, war, attempted suicide, etc. However, it does cover Alzheimer's disease. ...
The other requirement is that it cannot be used as an investment vehicle i.e. it should provide any cash surrender value or other money that can be paid or borrowed. It must also not provide any refunds and the dividends from the policy can only be used to reduce future premiums. Lastly, it cannot be used to pay or reimburse for expenses that would be paid or reimbursed under Medicare.
This is a tough question and requires a significant evaluation of your personal situation, type of services you might need and what portion of it could be paid by social security related benefits, not to mention the retirement savings you may have earmarked for health care. The Medicare website has a long term care planning tool with a comprehensive questionnaire to give you an idea about the amount of long term care that you are likely to come across. However, to get a rough idea, people in good health with an active lifestyle in their 40's should be planning on spending about $200,000 in long term care during their lifetime. This covers for about 5,000 hours of care with family and friends, about 500 hours of formal care at home by skilled caregivers, and about 600 days of assisted living or nursing care. ...
Individuals who are fortunate enough to have a few million dollar worth of assets, may consider self insuring i.e. instead of buying a long term care insurance, paying on their own when needed. Lately, the most compelling reason to purchase LTCI is shifting from asset protection to concerns over the quality of Medicaid funded home care. A good LTCI policy can help avoid nursing home or even Medicaid, allowing the patients to avail home care as long as possible.
As you may guess, the cost of LTCI really depends on your age, health condition, insurance type and options/features. But here are some estimated premium ranges based on the age and option for inflation adjustment. For a 40 year old without any inflation adjustment, the premium is about $300 per year, and with a 5% inflation provision it could be nearly $700 per year. For a 50 year old person, the corresponding premium amounts could be about $400 and $900 per year respectively. For a 65 year old, they jump to about $1,000 and $1,200 per year respectively.
Review your potential long term care need, benefits provided by Medicare and your financial situation. If you decide to purchase a long term care insurance, get a few quotes from some of the leading providers in this space. See the list below under options.
With the progress of medical technology, people are living much longer than ever before. The number of Americans age 65 and older are increasing more rapidly than the rest of the population. The number of those at 85 years or above is growing even faster and they are spending more time in nursing homes and other care facilities. The help from Medicare and Medicaid programs may not sufficient to meet all the health care needs in old ages. A long term care insurance policy provides coverage for this risk. ...
According to some studies, the average lifespan of a person born today will be about 10 years more than the one born in early 1950's; 75 versus 66 for a male and 80 versus 70 for a female. Even with the help of Medicare during the old age, one still has to pay for a portion of the health care services. Since the number of working years has not significantly increased to earn for a longer duration and save for the old age health care expenses, one needs to plan in advance and save more for the care during old age. This increased longevity coupled with the tightening of Medicaid eligibility by Congress is causing people a lot of anxiety. ...
The cost of long term care which includes nursing home care, assisted living, and home health care is rising at a rate close to twice the rate of overall inflation. The current average cost of one year in nursing home runs to about $70,000 while average hourly rate for a home health worker is about $18-$20 per hour, which can add up to $35,000 - $40,000 annually. It is believed that a 65 year old retiring today, may need about $200,000 for the next 10 to 15 years for health care expenses on top of the Social Security and Medicare benefits. Traditional healthcare plans and Medicare generally do not cover these expenses. For example, Medicare supplemental policies issued by private insurers do not provide coverage for extended care. This is why, you need to consider buying a Long Term Care Insurance (LTCI). Additionally, Medicare does not cover most of the services offered by LTCI and Medicaid is somewhat restrictive. Besides, there is also a tax incentive. The tax deductible limits for LTCI premium varies from $270 to $3,400 depending upon the age.
Long term care insurance offers financial support in paying for necessary long term care services such as:
HIPAA requires the long term care policies to be guaranteed renewable. What it means is that if during the policy, the insured person develops a serious condition, the insurance company can not deny the renewal of the policy. The only exclusions to this policy are the illnesses arising out preexisting conditions, war, attempted suicide, etc. However, it does cover Alzheimer's disease. ...
The other requirement is that it cannot be used as an investment vehicle i.e. it should provide any cash surrender value or other money that can be paid or borrowed. It must also not provide any refunds and the dividends from the policy can only be used to reduce future premiums. Lastly, it cannot be used to pay or reimburse for expenses that would be paid or reimbursed under Medicare.
This is a tough question and requires a significant evaluation of your personal situation, type of services you might need and what portion of it could be paid by social security related benefits, not to mention the retirement savings you may have earmarked for health care. The Medicare website has a long term care planning tool with a comprehensive questionnaire to give you an idea about the amount of long term care that you are likely to come across. However, to get a rough idea, people in good health with an active lifestyle in their 40's should be planning on spending about $200,000 in long term care during their lifetime. This covers for about 5,000 hours of care with family and friends, about 500 hours of formal care at home by skilled caregivers, and about 600 days of assisted living or nursing care. ...
Individuals who are fortunate enough to have a few million dollar worth of assets, may consider self insuring i.e. instead of buying a long term care insurance, paying on their own when needed. Lately, the most compelling reason to purchase LTCI is shifting from asset protection to concerns over the quality of Medicaid funded home care. A good LTCI policy can help avoid nursing home or even Medicaid, allowing the patients to avail home care as long as possible.
As you may guess, the cost of LTCI really depends on your age, health condition, insurance type and options/features. But here are some estimated premium ranges based on the age and option for inflation adjustment. For a 40 year old without any inflation adjustment, the premium is about $300 per year, and with a 5% inflation provision it could be nearly $700 per year. For a 50 year old person, the corresponding premium amounts could be about $400 and $900 per year respectively. For a 65 year old, they jump to about $1,000 and $1,200 per year respectively.
Review your potential long term care need, benefits provided by Medicare and your financial situation. If you decide to purchase a long term care insurance, get a few quotes from some of the leading providers in this space. See the list below under options.