Life spans around the world are rapidly increasing with improvements in health care and living conditions, and this is good news for most of us. However, many people who age into their 70s, 80s, and beyond, become incapable of caring for themselves, and must come to rely on other sources of assistance. And although family members have traditionally cared for their elders as necessary, this situation has also changed (at least in the Western world), as children move far away and aging parents prefer to live independently.
Nursing homes have proliferated to fill this need, but nursing homes are extremely expensive; rock-bottom prices in the United States might start at $150 a day. Regular insurance does not cover nursing home stays, nor does Medicare. Medicaid, a government-sponsored health insurance program that services low-income families, will generally cover nursing home care, but applicants must first qualify and, if necessary, spend down their assets to poverty level before they will be accepted for coverage.
To be fully protected against this kind of financial hardship, you can purchase long-term care insurance. These policies are very flexible, and can cover a wide range of possible contingencies. They can be written to cover home care as well as nursing home care, and care overseas as well as in the United States. The cost of your premiums will depend on such extras, as well as on how old you are when you initiate coverage; whether you have any preexisting conditions; whether you choose inflation protection; and a variety of other factors.
Benefit Period For Policies
Long-term care policies have a benefit period – the maximum number of days covered by the policy. Typical periods would be from two to five years, or lifetime (unlimited) coverage. Obviously, the longer the period of coverage, the more expensive the policy. (Often these periods are translated into dollar amounts in your policy.)
Daily Benefit Amount
You will also select your daily benefit amount – the maximum daily amount that your policy will cover you for. You can often choose from as low as $50 a day – which will not come close to covering any nursing home’s billing – to as high as $500 a day. One strategy might be to start at a reasonable daily sum – say, $175 a day – and purchase a policy with inflation coverage. Each year, the minimum daily coverage increases by a certain percentage, so that in 15 years, you may eligible to receive coverage of $300 a day. This is very important – even though your premiums will be cheaper if you don’t purchase inflation protection, your $175 a day may cover only half your costs or less in 15-20 years, and you will face financial hardship at that time, when you are least able to cope with it.
“Comprehensive” coverage would cover you for care at a wide variety of facilities as well as home care; “facility care only” covers you for nursing home or assisted living facility care only.
Long-term care premiums are expensive, as high as several thousand dollars a year. They are cheaper if you purchase your policy at a relatively young age (say, around 55), but then you will be paying premiums for a longer time. You will need to calculate a strategy that best suits your situation, and your budget.
Carefully Select Your Insurance Company
It is also important to research your prospective insurance company, and the overall state of the long-term health insurance industry. This is still a relatively new branch of the insurance industry, and, as of March 2011, many insurers were having difficulty rationalizing their income from premiums, their income from investment, and their rapidly increasing payouts. Some insurers have drastically raised premiums; others have dropped offering long-term care insurance policies completely. If you are seriously considering such insurance, it is important to do your research.