Seven Things To Know About LTC Insurance

1. You may not need as much of it as you think

There is usually no need to purchase enough of it to cover the cost of care in the locale where you may use it.  Bear in mind that most income such as Social Security continues until death, as do, pensions, interest income, etc.  Lifestyle will change too, no Branson, MO trip anymore, cruise, camping, and other fun things may not happen when one cannot participate leaving more of your income to put towards the cost of care.

2. 70% of us will need care (2015 Medicare and You, Centers for Medicare and Medicaid Services)

So don’t think it won’t happen to you.  As healthcare in the US improves, things that used to kill us, now only “wing” us, causing more need for care in later life.

3. Women are at significantly increased risk

About 68% of nursing home residents and 72% of assisted living residents are women. (Source: Long-Term Care Services in the United States: 2013 Overview, National Center for Health Statistics) Thus there is even more urgency for women to obtain coverage, and to do so before things like their first bone density test.  Many LTC insurance companies charge women significantly more than men, BUT NOT ALL!

4.  Don’t believe the average cost surveys.

Some areas of the country cost much less than other areas to receive LTC services.  The lowest costs are in West Virginia and Louisiana.  New England and Alaska are among the priciest locales.  Check out the actual bills where you may need care, not just the median cost.

5.  Medicare does not pay for LTC

This gets confusing as Medicare will pay for up to 100 days in a nursing home following 3 days inpatient in a hospital, for the same reason you were hospitalized, and while you are improving (medical care).  It save Medicare money to have you recover in a $300/day nursing home bed than a $3000/day hospital bed.  Most of us who need care, will need more than 100 days, and if we did not spend 3 days inpatient in a hospital, we may receive no Medicare coverage for the nursing home.

6.  I can afford to pay if this happens to me

Really?  Not all care is significant enough to allow deducting it as a medical expense.  If you need $100,000 that you can spend out of your IRA or 401K account, you will need to withdraw approximately $200,000 so that you have $100,000 after the new “rich person” income tax bracket you will be in.  Even if you can afford it, why would you want to when insurance can cost pennies on the dollar to pay the bill versus using up your assets that you may want to leave to family or charity.

7.  It won’t be that long, none of my relatives have needed care for long

20% of people needing LTC will need it for more than 5 years.  If you follow averages of how long people might spend in the nursing home, remember than only about 20% of LTC is provided there.  The majority of care is provided in your own home (no statistics for that) or in assisted living facilities (4 years average stay).  Now add that to the “average” nursing home stay of 2.5 to 2.8 years depending on which survey you read and it might be a while.

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