None of us like to think about the costs of getting older, but it is an expensive phase of life. One of the biggest questions is whether or not to buy long-term care insurance. And now even if you want it, many companies like the giant in the industry (Genworth Financial) are refusing to write new policies. They announced last month, that they would no longer offer individual policies in California. There is a definite appeal about long-term care insurance, especially since Medicare does not pay for things like extended stays in nursing homes or assisted living facilities. It only pays for a short time for skilled nursing care or rehabilitative services. Medicare also does not pay for in-home care like personal assistants who assist with dressing or cooking. The downside is that premiums can be extremely high, and everyone may not need that level of care. There are a few lucky ones who escape lengthy long-term illnesses.
So what should one do? First of all, take into account one’s family history. A recent article in the NY Times said that for those whose mother (not father) had Alzheimer’s, there is a 50% higher risk of contracting the disease than in the general public. Unfortunately, that means me. My mother was diagnosed around age 73. My wife and I purchased long-term care insurance several years ago. For me, it was probably a good decision. For others, without such a family history of extended final illnesses, here are some questions one should consider.
1) What is covered? Make sure the policy covers different types of facilities - not just one type. In other words, you want it to cover nursing homes, assisted living facilities, as well as adult day-care, and hospices. Also, know what kind of providers are acceptable for in-home services. Must they be certified or can they have just had some on-the-job training?
2) How is eligibility determined? Some policies require the recipient to be unable to perform 6 activities of daily living before coverage kicks in. Others require that they only be unable to perform 3 (things such as eating, bathing, etc.)
3) When is it cost-effective to purchase coverage? It’s probably a better deal to purchase long-term care insurance when one is in one’s 50s. If one waits until they are in their 70s, the premiums will be very expensive.
All these things need to be considered when purchasing a long-term care insurance policy. It can be a valuable way to finance long-term care, if the policy is broad enough to allow for a range of future health scenarios as the individual ages.
“A majority of text has come from an article prepared by Maureen E. Hook, Ph.D. and published in Attorney Andrew Hook’s newsletter. Andrew Hook is a friend of Attorney Timothy P. Crawford and this information is being used here with permission.”