A Long-Term Care Insurance Checklist

Most of us think about aging, plan for their retirement, and consider how they’d like their later years to be lived.  U.S. Money suggested that “people as young as their 40s ought to raise their retirement savings rate now to prepare for their later years in a recent article, “Long Term Care Needs Demand Your Attention Now.”  Yet, I would bet that most people are not considering themselves as part of the 70% of Americans who will need long-term care.

Today, the cost of long-term care is rising beyond the rate of inflation. Americans are paying more than $17,000 a year for nursing home facilities than they did in 2005. This represents approximately 4.35% compound annual growth.  With statistics like these, it’s easy to pay attention.

Currently, there are four basic ways to cover the cost of care: Medicare, Medicaid, Out-Of-Pocket, or Private Long-Term Care Insurance.  Medicare is a co-payment governmental program that provides hospital and medical insurance to people 65 years or older and to qualified ill or disabled persons. To be eligible for Medicaid, the individual must meet some rigid requirements, as the program is reserved for the indigent. It goes without saying that out-of-pocket will be costly. But a well-planned long-term care insurance (LTCI) policy can provide a viable solution to a costly and anxiety-ridden problem.

Here is a checklist for the top things to consider when looking into long-term care insurance

• Understand the services covered and how long they will last. The main categories include:
  • Nursing home care
  • Home health care
  • Assisted living facility
  • Adult daycare
  • Alternate care
  • Respite care
  • Other
• Know policy costs per day, per month and per year
• Determine if there is an inflation adjustment feature and a nonforfeiture feature within the policy
• Confirm what the policy pays per day for all of the above categories
• Find out whether the policy carries with it a maximum length of coverage for each period of confinement for all of the above categories
• Define whether your policy have any limitations or exclusions, such as supplies, medications and linens
• See if the policy coversAlzheimer’s disease or other common neurological disorders and make sure that you won’t be disqualified if you develop Alzheimer’s after the purchase of the policy
• Many policies offer a 30-day free look period, so it behooves you to find a plan that gives you this option
• Make a rational and informed decision, not based on emotion or fear
• Educate yourself and plan for contingencies before you purchase a LTCi product

In addition, you should always be realistic about your income and any determine what, if any, financial assistance you might receive from family members or loved ones. Know that as you get older and start experiencing health problems, it becomes more difficult to raise the amount of coverage. With that said, it’s important to also ask if you will have the option to lower the amount of coverage down the road if you need to.  It is in your best interest to explore your options now by talking with family, friends, and ultimately, a professional and utilizing the wide array of free LTCi resources currently available online.

The preceding post had information provided by Genworth Financial