A 2006 Genworth Financial Survey says the national average private-room rate at a nursing home was $194.28 per day or $70,912 annually. Long-term care insurance (LTC) may be one solution for those who need to bridge the gap between their savings and the actual costs they’ll face. Determining and paying for long-term care is almost too complex a topic to be covered in a short article like this, but here are some of the questions you need to answer before investing in long-term care insurance or other options:
• What resources do you have? We’re not just talking about money here. While caregiving puts a strain on family, it’s important to consider whether family and friends are truly willing and able to help with your care, which can provide a considerable financial and emotional benefit.
• How old are you and your spouse, and what’s your health history? People in good health purchasing long-term care insurance at the age of 55 usually get the most affordable deal in LTC insurance. But an individual’s family health history and current health status are the real determinants of what your LTC insurance policy will cost — or if you’ll qualify for coverage at all. Also, it’s important to note that 40 percent of longterm care is provided to individuals between the ages of 19 and 65, so the need for care can strike at any time. • Are you a single woman? Again, personal and family resources come into play here, but since women typically live longer than men — and they still earn less on average than men — women should take a heightened interest in providing for their long-term care safety net.
• What types of services are covered? Over the course of time, long-term care policies have evolved to place more emphasis on home-based care or assisted living, since most people would choose to recover or live out their last days in a familiar environment. A basic LTC insurance policy pays for assistance with activities of daily living including eating, dressing, bathing, toileting, incontinence and transferring (bed to chair, etc.). Each policy lists the types of services that are covered under nursing home care and under home health care. Homemaker services are generally covered and other services as listed in the policy.
• What triggers coverage? A qualified LTC policy won’t go into effect until the covered individual can’t perform two tasks of daily living for a period, typically 90 days, or when that person needs substantial supervision related to cognitive impairment. This is where you have to read the fine print since some policies are more restrictive than others. More affordable policies generally take longer to kick in. See if coverage for other physical ailments is available as part of the policy and what per-diem or monthly allowances are offered.
• What if I never want to go to a nursing home? The bestdesigned LTC policies will pay the same amount of benefit whether care is received in a long-term care facility, an assisted living facility, an adult day care center or in the home. Some policies do offer reduced percentages for home health care vs. nursing home care.
• What’s the record of particular companies in this business? Over the past generation, more companies have gotten involved in the LTC insurance business, and it makes sense to see not only who the leaders are at the time you’re buying and what they’re offering, but also how financially healthy these companies are and have been over the course of time. REBECCA WARREN is a certified financial planner and certified senior adviser in Mesa. She can be reached at (480) 357-8380 or by e-mail at rebecca@warrenfinancialservices. com.
