You may already know that seven in ten of us will eventually need some type of long-term care services and supports. But, you may not know that most people today receive that care at home and not in a nursing home. The inevitable question is how to pay for it when it is needed, and is it worth getting long-term care insurance as a way to afford this care?
Long term care insurance may not deliver what you need. Fewer than one in ten people now buy this insurance and there are many good reasons why they do not. Judith Graham explains for Kaiser Health News that this insurance is often very expensive, and it primarily covers nursing home care and not the home care people want.
Indeed, long-term care insurance may never meet people’s needs, both in terms of cost and coverage. Some people believe that long-term care insurance would be less expensive if it only covered home care. Nationally, home care is less costly on average than nursing home care, $46,000 (daily for about six hours a day) v. $82,000 a year. But, home care can be extremely costly if it is needed round the clock, and costs vary by community.
Moreover, the cost of care has risen rapidly, far faster than inflation. Even a five percent inflation adjustment in a long-term care policy is likely not to keep up with rising costs. You could not count on a policy with a one-percent inflation adjuster, which some plans now offer, to meet your needs. And, unless you can foresee being able to pay an ever increasing premium over ten to twenty or more years—“level premiums” can and too often do rise significantly—you will likely be throwing away your money.
Similarly, if you do not buy as much home care coverage as you will need, you will likely be wasting your money. More than a quarter of people needing long-term care services will need these services for as long as two years. Around one in eight of them will need services for between two and four years. And, one in seven of them will need these services for more than five years.
Unless you have family you can count on for round-the clock care, you take a gamble with partial coverage from a long-term care policy. People wealthy enough to afford round-the-clock home care may be better off simply setting aside the money than buying long-term care insurance. And, millions of older adults qualify for Medicaid coverage of long-term care.
If you have limited income and assets, depending upon where you live, Medicaid will often cover your long-term care needs. In many states, even if your income and assets are too high to qualify for Medicaid, you can spend down to the Medicaid eligibility level once you need a lot of care.
So, before spending the time and resources to consider a long-term care policy, speak to an independent expert, such as a State Health Insurance Program (SHIP) counselor. Do not rely on the advice of an insurance agent or long-term care insurance salesperson.
It’s important to plan ahead. The U.S. Department of Health and Human Services estimates that more than six million people over 65 have a “high need” for home care or nursing home care. They need help with two of five activities of daily living such as eating, bathing, toiletting, dressing or moving from their beds to a chair for 90 days or more. Or, they need a lot of help because they have dementia.
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