The average age of the population of the United States is at an all-time high in the history of the county. The group of adults that are over 65 years old have surpassed the number of teenagers in the United States of America. This coupled with the fact that people in their 50s and 60s can expect to live much longer than any previous generations, justifies the necessity of acquiring a long term care policy. As life expectancy continues to rise in the U.S., more and more elderly Americans, especially those between the ages of 40 and 65, are preparing for their golden years by buying long term care insurance.
Statistics show that long–term care policies will cost, on average approximately $900 per year at age 50, $1,900 per year at age 65, and $6,000 per year at age 75. With nursing home care cost averaging more than $60,000 a year, it is important for consumers to fully understand long–term care insurance and when it should be purchased to best prepare for the future.
What is Long Term Care?
Long term care is a variety of services which help the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves, including medical, personal and social services, such as nursing home care, adult daycare and home health care. Long term care is designed to cover some or all of these services.
What are some of the typical qualifications for benefits?
Most long term care policies require that you be not able to perform usually two or more activities of daily living, which are eating, bathing, dressing, transferring (being able to get in and out of the bed without assistance), toileting, and continence (being able to control bladder and bowel functions). An elderly person may also qualify for benefits with cognitive impairment, as verified by an administered test.
Most long term care policies also have an elimination period, which is a waiting period before benefits will begin. This is the number of days you must qualify for nursing home care before benefits will be paid. Elimination periods usually vary between 0 and 180 days.
What typically will a Long Term Care Policy pay in benefits?
Long Term Care policies typically pay benefits ranging from $50 to $400 per day. These policies are usually issued in periods that can range from 1 year to approximately 6 years. Long term care policies can be issued with benefits that increase, usually 3% to 5% yearly, to compensate for inflation. (The benefit increase is usually yearly, compounded, or step-rated depending upon the policy.)
Are there exclusions with a Long Term Care Policy?
Long term policies typically have exclusions. Many states do not allow exclusions for certain conditions. The following are some of the typical exclusions in long term care policies:
- Drug Addition or alcoholism
- Self-inflicted injury or suicide
- Disability caused by an act of war
- Mental or nervous disorders or diseases (except organic brain disorders)
- Benefits paid by other policies or by government benefits
What should I consider before purchasing Long Term Care Insurance?
Some of the factors to consider when buying long term care insurance are health, age, gender, family situation, and income.
Health: If your family is genetically predisposed to chronic or debilitating health conditions, you could be at a greater risk compared to people your own age and gender.
Age: The longer you live the more likely that you will spend time in a nursing home. Statistically, because of the increased longevity of Americans and the increase in elderly population with the “baby boomers” more people than ever require the services of nursing home care. The earlier you purchase a nursing home policy, the lower your premiums will be.
Gender: Woman statistically live longer than men, and therefore more likely to require nursing home care. Consideration should be given to your spouse, who may outlive you and have a need for nursing home care.
Family situation: If you spouse, children or grandchildren are available to care for you in your elderly years, you may need a less comprehensive long term care policy. You should also consider that fact that many loved ones indicate they will help you in your elderly years, but too often, they have to remain employed themselves and many times do not really have the ability or time for care giving.
If you have built up a life time of assets during your working career, long term care insurance is one of the most effective ways to protect those assets. If, for example, you spend just 5 years in a nursing home at the cost of $60,000, the cost of care may deplete your assets.
Can I qualify for Medicaid to cover my nursing home expenses?
The amount of countable assets you can have and still qualify for Medicaid varies from state to state. In most states, however, you can only retain only about $2000 in countable assets and married couples who are living in the same household can retain only retain about $3000 in countable assets to qualify for Medicaid. To qualify for Medicaid, you monthly income must be less than the federal poverty level which can vary depending on your family size. Medicaid will not pay for assisted living facilities, nor will they pay for a private nursing home room.
How will a “State Partnership Policy” help me keep my assets protected from Medicaid?
The State Partnership Policy is a joint federal-state policy initiative to promote the purchase of private long term care insurance. A number of states have “ State Partnership” long term care policies that can protect your assets from the “spend down” required for you assets to receive Medicaid benefits. Purchasing a State Partnership qualified long term care insurance policy provides extra benefits. The major benefit is described as a “dollar for dollar” asset disregard or “spend down” protection. Individuals who purchase a Partnership policy “earn” one dollar of Medicaid asset disregard for every dollar of insurance coverage paid by their policy.
An example of this is when, Ted buys a Partnership policy that pays out $100,000 of benefits. Medicaid will then disregard $100,000 of Ted’s assets which they would have depleted of him to qualify for Medicaid coverage. The Partnership policy also protects those assets even after death from Medicaid estate recovery. Also benefits from Partnership policies are non-taxable, whereas non-Partnership may be taxable. You may check with us to determine if these programs are available in your state. For a no obligation quote, just click on the “FREE QUOTE NOW” button below.
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Carriers quoted will vary from state to state.)