The Facts About Long Term Care Insurance

The average cost of staying in a nursing home for a year is between $55,000 and $100,000, depending upon where you live. Are you ready for long term care costs? Private long term care insurance can help you prepare your finances for the future.

• What is long term care insurance?
  Long term care (LTC) insurance is a type of health care insurance that covers nursing home, skilled nursing, assisted living facility, Alzheimer's Disease care, custodial care, or in-home care costs for people over 65. Medicare, disability insurance, and traditional medical insurance plans do not cover most other kinds of long term care.
• How does long term care insurance work?
  Once it has been determined that you qualify for long term care, you will receive a daily benefit of $100-$500 maximum for your expenses, depending upon the type of coverage you selected. Your coverage is guaranteed as long as you continue to pay your insurance premiums.
• What happens if I don't have long term care insurance?
  If you are not covered by LTC insurance, you will need to pay for your nursing home and long term care expenses directly or rely on your family to cover the costs. You can qualify for some long term care coverage through Medicaid, but only after you and your spouse have "spent down" almost all of your assets.
• What does long term insurance cost?
  Long term care insurance can be expensive. A 65-year-old in good health will probably pay a $1,000-$3,000 a year in long term care premiums. Although this is a high premium, it is still much more affordable than the $40,000 to $100,000 per year cost of long term care. LTC insurance is also notoriously complicated. There are coverage, inflation protection, benefit periods, daily benefit, trigger, and elimination periods that all need to be taken into consideration. The earlier you start paying for long term care insurance, the less expensive it will be.
• Who should buy long term care insurance?
  Over 60% of people over the age of 65 require long term care at some point. Paying for long term care without insurance can be a very expensive proposition. However, the premiums for long term care are too expensive for many people. Consider the financial burdens, the likelihood you will require long term care, and your qualification for Medicaid before determining if LTC insurance is right for you. New government policies and tax benefits are being developed to help make long term care insurance more affordable.
• Do you loose the money you paid for insurance if you don't require long term care?
  Some long term care programs include a program called "return of premium on death." If you have this type of long term care insurance and die without using your entire benefit, your premiums (minus the amount you used) will be returned to your estate. Different insurance plans will have different terms for the return of premiums.
• Where can I buy long term care insurance?
  Traditional insurance companies frequently also offer long term care coverage plans. Ask your medical insurance provider or employer if they provide LTC insurance plans. Alternately, the AARP offers its members a long term care insurance program through MetLife.

One final note: Be careful when selecting a long term care policy. Unfortunately, there are con artists and unscrupulous insurers who may try to take advantage of your situation. Investigate your options thoroughly and ask for referrals from people you know.

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