Long Term Care Insurance:
What you should know to make the best choices.
By SUSAN L. AMES CLU, ChFC
Why should you consider long term care insurance?
70% of people over age 65 will require long term care during their life time. The average annual cost of a private nursing home room in 2008 hit $76,285 according to the Department of Health and Human Services. With a 3% inflation rate, this means the same room will cost close to $130,0.00/year by 2030. With the average stay in a nursing home being 2.5 years, the total cost would come to $37.5,000 by 2030.
Who should buy long term care insurance?
Healthy people with net assets of $500,0.00 to $2,00.0,000. Above that level, you may want to self-insure. The best time to buy long term care insurance is when you are in your late 50's or early 60's. It makes sense to purchase long term care insurance if you have a family history of health issues that lead to dementia, Alzheimer's, diabetes or a long life span.
Who should not buy long term care insurance?
You currently receive or may soon receive Medicaid benefits.
You have limited assets and can't afford the premiums over the lifetime of your policy. Your only source of income is a social security benefit or supplemental security income.
How do you select an insurance company?
When selecting an insurance company check the company's rating by one of the rating services: A.M. Best, Fitch, Standard & Poor's, Duff & Phelps, Moody's or Weiss. Consider the company's reputation, claims paying history and commitment to the long-term care market. A company that has sold a lot of long term care health insurance policies has a larger risk pool, thus reducing the threat of large premium increases in the future.
What services should your policy cover?
Your Long Term Care Health Insurance should cover home health care, assisted living facilities, hospice care (either at home or in a facility), adult day care, nursing home care along with additional benefits such as caregiver training of a friend or relative, equipment and home modification such as ramps, stair lifts and grab bars.
The level of coverage falls into three categories:
Skilled Care includes nursing care, physical, occupational, respiratory and speech therapy or rehabilitation performed by licensed professionals.
Intermediate Care occurs when a person receives nursing care or rehabilitation on a regular basis but not full-time.
Custodian Care is not medical care and includes assistance with activities of daily living i.e. personal hygiene, simple health care tasks, managing medications and homemaker services such as meals, laundry and light housekeeping performed by home health aides and personal care attendants.
The insurance policy should not require having skilled care before paying for custodian care.
Susan L. Ames CLU, ChFC owns Ames Financial Group a financial planning firm located in Boca Raton that specializes in working with business owners, women post-divorce and widows. She is also the founder of Education For Life's Journey, Inc. which presents the "Second Saturday: What Women Need To Know About Divorce" seminars in South Florida. Visit her websites at www.amesfg.com and www.eflj.org .
What you should know to make the best choices.
By SUSAN L. AMES CLU, ChFC
Why should you consider long term care insurance?
70% of people over age 65 will require long term care during their life time. The average annual cost of a private nursing home room in 2008 hit $76,285 according to the Department of Health and Human Services. With a 3% inflation rate, this means the same room will cost close to $130,0.00/year by 2030. With the average stay in a nursing home being 2.5 years, the total cost would come to $37.5,000 by 2030.
Who should buy long term care insurance?
Healthy people with net assets of $500,0.00 to $2,00.0,000. Above that level, you may want to self-insure. The best time to buy long term care insurance is when you are in your late 50's or early 60's. It makes sense to purchase long term care insurance if you have a family history of health issues that lead to dementia, Alzheimer's, diabetes or a long life span.
Who should not buy long term care insurance?
You currently receive or may soon receive Medicaid benefits.
You have limited assets and can't afford the premiums over the lifetime of your policy. Your only source of income is a social security benefit or supplemental security income.
How do you select an insurance company?
When selecting an insurance company check the company's rating by one of the rating services: A.M. Best, Fitch, Standard & Poor's, Duff & Phelps, Moody's or Weiss. Consider the company's reputation, claims paying history and commitment to the long-term care market. A company that has sold a lot of long term care health insurance policies has a larger risk pool, thus reducing the threat of large premium increases in the future.
What services should your policy cover?
Your Long Term Care Health Insurance should cover home health care, assisted living facilities, hospice care (either at home or in a facility), adult day care, nursing home care along with additional benefits such as caregiver training of a friend or relative, equipment and home modification such as ramps, stair lifts and grab bars.
The level of coverage falls into three categories:
Skilled Care includes nursing care, physical, occupational, respiratory and speech therapy or rehabilitation performed by licensed professionals.
Intermediate Care occurs when a person receives nursing care or rehabilitation on a regular basis but not full-time.
Custodian Care is not medical care and includes assistance with activities of daily living i.e. personal hygiene, simple health care tasks, managing medications and homemaker services such as meals, laundry and light housekeeping performed by home health aides and personal care attendants.
The insurance policy should not require having skilled care before paying for custodian care.
Susan L. Ames CLU, ChFC owns Ames Financial Group a financial planning firm located in Boca Raton that specializes in working with business owners, women post-divorce and widows. She is also the founder of Education For Life's Journey, Inc. which presents the "Second Saturday: What Women Need To Know About Divorce" seminars in South Florida. Visit her websites at www.amesfg.com and www.eflj.org .
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