What Is Long-Term Care Insurance?
/>· The cost of long-term care in the state where the beneficiary lives
For example, in 2005, a typical low-end long-term insurance policy cost ,877 per year for a 55-year-old, ,000 per year for a 65-year-old, ,600 for a 75-year-old, and more than ,000 for an 80-year-old, according to the U.S. Department of Health and Human Services. These figures are higher today.
Premiums are lower for younger people, and the policy holder must be in reasonably good health to pass underwriting. So when thinking about getting a policy, it makes sense to do so sooner rather than later.
What does long-term care insurance cover — and what’s not covered?
Coverage depends on the plan you choose. Some policies cover only nursing home care, but many policies now include coverage for in-home care, including nursing care, physical therapy, and medical equipment. Many policies also cover assisted living, which is likely to be important, since this type of care is rapidly expanding.
Policies may also include adult daycare and respite care to give a break to a caregiver who is a family member. Almost all policies cover care related to Alzheimer’s or other forms of dementia (though there are exceptions, and since this is a common condition, you’ll need to be careful that the policy you choose does in fact cover Alzheimer’s). In general, the more types of care that are covered, the higher the premiums.
Most policies include a deductible or waiting period before the coverage begins, especially if the policy holder has any pre-existing conditions noted during the underwriting process. Most policies don’t include coverage related to alcohol or drug abuse. Also, no benefits at all are paid unless the insured person qualifies for coverage under the specific terms set by the policy.
Who’s eligible?
Anyone between the ages of 18 and 84 in reasonably good health can purchase long-term care insurance, according to the HIAA. People over the age of 84 aren’t usually eligible to buy new policies.
Many people can’t buy long-term care insurance, however, because they are rejected due to pre-existing health conditions. The Insurance Information Institute reports that in 2003 to 2004, 11 percent of people in their 50s, 19 percent in their 60s, and a whopping 43 percent of people in their 70s had their long-term care insurance applications rejected.
If one or both spouses don’t qualify for long-term care insurance because of health or age, some other insurance products — though not new insurance policies — are available that can help with the costs of long-term care. For example, viatical settlements, in which an older adult sells his life insurance for roughly the present value of the policy, can help fund long-term care. This type of product has some eligibility limitations, and the money obtained from selling the policy is taxable.
Life insurance policies may also offer something called an accelerated death benefit (ADB), which offers cash advances against the value of the policy while the affected person is still alive. These policies have some drawbacks — you have to continue paying the insurance premium, and the policies can generally be used only if the insured person has a terminal illness, needs nursing home care permanently, or can’t perform normal daily activities.
How do you purchase long-term care insurance, and what else should we be aware of?
If you’re going to look into long-term care insurance for someone in your care, check with his current or former employer, life insurance provider, or insurance broker to see if she can add long-term care coverage to an existing policy. If it’s for your parents, you may also be able to purchase a long-term care insurance policy through your own employer. If your parent is or was a local, state, or federal government employee or a veteran, he may be eligible for long-term care policies through a government-sponsored plan.
Insurance policies are legally enforceable contracts, but they don’t always match the sales pitch of the agent or the hype in the brochure — some policies require specific care providers or nursing homes, for example, so read the policy thoroughly. Before signing on, compare policies and prices from different companies, and consult with an elder law attorney or financial planner if you have any questions. Don’t rely exclusively on the word of an insurance broker or agent. If you’ve already bought insurance but find it’s not what you thought, the law provides for a 30-day cancellation period.
Remember that when it comes to older people and money, fraud is something to watch out for. If the sales pitch sounds too good to be true, it probably is. Always check the insurance company’s rating and complaint history with your state insurance commissioner before signing any contracts or making any payments. You can also research the financial