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5 Things You Should Know about Long Term Care Insurance

  • Dec-07-2015
  • Richard Reich
Long term care insurance

As more and more baby boomers ease into retirement age and beyond, long term care continues to be one of the fastest growing healthcare categories. However, because so many people enter their senior years unprepared for the financial burdens that await them, it might not be growing fast enough.

So many of us prefer not to think about the unpleasant business of requiring long term care ourselves, and this can lead us to put off making simple preparations like looking into long term care insurance. Here are 5 things everyone should know about long term care, and how to protect yourself in your later years:

1. Who Needs Long Term Care?

We tend to think that it is only the elderly who require long term care, but that isn’t always the case. True, your chances of requiring some sort of home or inpatient care shoot up to about 70 percent by the time you reach 65 and above, but a surprising amount of young people also end up requiring ongoing medical care as well. In fact, due to accidents or chronic illness, around 40 percent of patients currently receiving some form of long term care are under the age 65.

2. How Much does it Cost?

In short, if you don’t have coverage, or some sort of solid financial safety net, long term care can quickly drain your bank account down to zero. The national average for adult in-home daily health care sits around $18,000 per year, and when you start looking into assisted living facilities, that number jumps dramatically. From light assisted living to private room nursing home care, you’re looking at annual fees ranging from $43,000 to $91,000 and, in some cases, well above $100,000.

3. What about Medicare?

Medicare can be a great resource for people who are over the age of 65 and/or disabled. However, Medicare does not cover the costs of custodial care, or room and board in a nursing home or other long term care facility. This leads some seniors to try to also apply for Medicaid, which can help, but it can require you to spend down your assets. Medicaid assistance is based on financial need, and individuals who apply for Medicaid typically cannot hold more than around $2,000 in liquid assets, depending on the state. This means that applicants often have to spend themselves into financial need in order meet their state’s Medicaid requirements, which can be tricky if you were planning on leaving some of your assets to your spouse or family.

4. What Are My Insurance Options?

Basically there are two major options for long term care coverage. The first option is a traditional insurance policy. This is pretty standard. Traditional long-term care plans will cover your inpatient or outpatient care for a fixed period of time, up to a set dollar amount, and require you to pay an annual premium, which may or may not change over time depending on the policy.

Basically there are two major options for long term care coverage. The first option is a traditional insurance policy. This is pretty standard. Traditional long-term care plans will cover your inpatient or outpatient care for a fixed period of time, up to a set dollar amount, and require you to pay an annual premium, which may or may not change over time depending on the policy.

Either way, there is no one-size-fits-all solution, so before you choose a policy, talk to an insurance professional and decide what is best for your specific circumstances and lifestyle.

5. When is the Right Time to Shop for a Policy?

Because your health at retirement age can be unpredictable, timing is extremely important when it comes to purchasing long term care insurance. Many people wait too long to start thinking about their potential care needs and end up paying much higher premiums because they don’t look into insurance until after they start experiencing health issues. The best time to buy long term care insurance is typically around your mid to late 50s and early 60s, while you’re still healthy and able to qualify easily.

Again, if you have any questions about long term care insurance, do some research and talk to your provider before settling on a plan. But whatever you do, don’t make the mistake of waiting until it’s too late. The earlier you start thinking about important life planning issues like long term care, the better off you and your family will be in the long run.

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  • Intramark Insurance Services, Inc., Insurance Services, Glendale, CA

  • Intramark Insurance Services, Inc.