Do You Need Long-Term Care Insurance?
On average, 52 percent of people who turn 65 today will develop a severe disability that will require LTSS at some point.
So does this mean you need long-term care insurance? Possibly.
Long-term insurance is marketed as a way to fill in the financial gaps if you have a chronic illness or disability and need help with the activities of daily life, such as those provided by HomeSpark caregivers, like bathing and getting dressed, running errands and preparing meals.
Not being insured “can be the single biggest devastator of a financial plan,” said Tom Henske, CFP and partner at New York-based Lenox Advisors.
Nor can you count on the government to bail you out when the time comes: Medicare doesn't pay for "custodial care." Medicare pays only for medically necessary, skilled nursing facility or skilled home health care. It may not give you the choice of the best care in your area. And while Medicaid pays for certain types of care for the low-income elderly, who is eligible and what services are covered varies from state to state, and is determined by such things as income and personal resources.
"Many folks wrongly believe that letting the government pay for their anticipated long-term care needs is the best solution, but Medicaid programs are in trouble funding-wise in every state," says Wilma Anderson, a registered financial consultant. "In the future Medicaid may become even harder to qualify for. If you don't plan for long term care (LTC), you may have limited or no choices to pay for care when your health changes."
Here are four things to consider when planning for long-term care:
How will you pay the bills?: Many financial planners and elder care experts say long term care insurance is a good place to start. It typically helps pay for things that your medical insurance won't, like in-home care, or remodeling your home so you can stay in it longer. But as with all forms of insurance, it's vital do your research.
Investigate the cost of a stand-alone long-term care policy: The younger you are, the lower the premium will be. The cost really depends on factors like family health history, age, how much insurance you think you'll need, how long you'll need it, where care is received, and more, explains Marion Somers, PhD, author of Elder Care Made Easier: Doctor Marion's 10 Steps to Help You Care for an Aging Loved One. The rule of thumb generally has been to purchase LTC coverage around age 55. However, when to get it really depends on your situation.
Shop around for the best policies and prices. Benefits vary: Weigh the scope of coverage, benefit and waiting periods, inflation protection and other factors against your income and health needs.
Read the fine print: "Insurance companies may try to offer added-value features beyond the basic benefits, but most of them don't add much value at all. Be thoughtful and realistic about your needs and priorities," says Ryan Malone, founder of InsideElderCare.com.
Truthfully, says Somers, "Not everyone needs long-term care insurance, but everyone needs a plan."