Have you ever thought about the idea of long term care insurance? If you are like most Americans, you probably haven’t, especially if you are younger than say, 60. We don’t like to think about such things, do we? Chances are, if you have thought about it, it’s because an insurance agent brought up the idea.
Another probable reason why you may have thought about long term care insurance is that you have a parent who is in need of care, and they (and you) have been considering the options.
Often, the decision to purchase long-term care insurance is a family decision, because the family members know best how much care they can provide and under what circumstances.
There’s usually one of the children who seems to be a designated caregiver. And that daughter (it’s always a daughter) states emphatically that her parents will never go to a nursing home. She will provide their care.
And she means it.
Here’s what she doesn’t understand: there are some conditions which require around-the-clock care. In such a case, the doctor will recommend nursing home care. Why? Because the doctor believes the needed care cannot be provided by a lay person, however well-intentioned.
Let’s look at seven reasons why you might want to consider protecting yourself with some form of long-term care insurance.
Your Odds of Using Some Form of Care Are High
If you are age 65, you have roughly a 70% chance of needing to be cared for, either at home, in a nursing home or an assisted living facility, according to government statistics https://longtermcare.gov/ Those odds suggest that some planning on your part is wise.
You Have Assets You Want to Protect
The number one reason you may want to consider long-term care insurance is that you want to leave a legacy for loved ones. You may have a home or a farm and/or investments that you hope to pass on to your heirs.
The cost of care in a nursing home these days is averaging $225 a day nationwide, and the average stay is three years, which amounts to $246,375. The stay is somewhat shorter for men and can be considerably longer for women. So it makes sense to cover at least some of the cost with insurance. If you had a car worth that much, you know you would have it covered to the hilt.
No Unpaid Caregivers Are Available to Help You
Life expectancy is increasing due mostly to better health care. You are likely to live a long time, and the longer you live, the more you will probably need someone to help you manage day-to-day living. But in your situation, there is no one available. Perhaps your family members are in poor health themselves, or live far away, so they can’t help.
Perhaps the need for long-term care arises suddenly, such as with a stroke or broken leg. Or the need can come on gradually, as with ALS (Lou Gehrig’s disease) or Parkinson’s. The list of disabling conditions in older age is very long.
Again, the wise thing to do is find a way to pay for some of the costs of care.
Your Care Options are Greatly Increased If You Own Long-Term Care Insurance
Modern long-term care insurance covers home and community care (such as adult daycare). It also covers assisted living and nursing home care. This fact means that you may never enter a nursing home. Your needs for the rest of your life may very well be met by home and community care plus assisted living.
If you don’t have this insurance, you will spend your own hard earned cash for these options. Then, if money runs out, and Medicaid has to take over payment, you lose the choice. Medicaid will only pay for the nursing home. And, as an added affront, Medicaid will tell you which nursing home they will pay for. It won’t be the best one, of that we are sure.
You Have Insurance for Everything Else
You have insured your home against fire and every conceivable insurable risk. You insure your cars in case they are stolen or damaged in an accident. You have medical insurance which pays some or all of your medical costs. You may even have disability insurance to provide you with an income if you can’t work due to an illness or injury.
It makes sense to insure against the probability that you will need to pay for long-term care.
Medicare Pays Next to Nothing for Long-Term Care
The maximum benefit under Medicare is 100 days, after a 3-day hospital stay. In order for Medicare to pay anything, your health must be improving. Nothing is paid out for custodial care, or what is termed palliative care. So if you are “just” being taken care of physically, with no more attempts to cure you, Medicare stops paying sooner than the 100th day.
Please note that Medicare and Medicaid are two separate and distinct programs.
You earn Medicare by working for at least 10 years and paying 1.45% of your wages into it (or 2.9% if you are self-employed).
Medicaid is health insurance for those who have very limited income and assets.
A Few States Have Partnership Programs
If you are lucky enough to live in a state that has a partnership program, buying long term care insurance will allow you to protect a certain amount of your assets from Medicaid.
It works like this: You enter a nursing home and your long-term care policy pays a total of, say, $200,000, and then you pay out of your pocket as long as you can. When your assets are depleted, Medicaid pays for your care. Upon your death, Medicaid will recover its costs from your estate, except your heirs get to keep up to $200,000 of the value of your estate – i.e, the amount the long-term care policy paid.
Check with the insurance department in your state to determine if your particular locality has such a program. If not, you could urge your state representative to introduce such legislation.
Two Reasons You Shouldn’t Buy Long-Term Care Insurance
Reason number one why you shouldn’t buy long-term care insurance: You have little or no assets to protect. Medicaid is going to wind up paying for your care anyway, and the only one to benefit from the insurance is Medicaid.
Reason number two why you shouldn’t buy long-term care insurance: You have accumulated a small (or large) fortune, and you can afford to pay for your care for a very long time and still have plenty of money left over to leave a sizeable estate for your heirs. But unless you are in the Warren Buffett category, chances are you would still be wise to protect yourself.
The Choice Is Yours
In the end, of course, the decision is yours whether you buy long-term care insurance or not. But let it be an informed choice.