People used to purchase this insurance to prevent them from spending all their hard earned nest egg paying for Long Term Care (LTC). That is still a reason but there is a much more urgent reason to have this insurance when it comes to Medicaid.
When your assets have all been drained paying for care, you can qualify for a government welfare program called Medicaid, which will pay for your LTC when you cannot. It is good that we have such a program, but it pays so much less than the cost of care, most facilities will not accept you if you are on it.
They simply cannot afford to lose money on every resident and try to make up the loss with volume.
So, they can and do say no at the door to people who cannot prove that they have the means to pay for their care for at least two years. This has been growing until now there are few and far between who will accept someone on Medicaid or who will soon be on Medicaid.
But someone HAS to take me, you say. Yes, there are facilities who HAVE to take Medicaid, and they are nursing homes. Nobody wants to live in a nursing home.
The reason a nursing home will accept you on Medicaid is because they get a significant income from Medicare for providing rehab care for people leaving the hospital. Medicare pays them well for this care and if they accept Medicare, then they HAVE to accept Medicaid.
So, if you want care at home, or in an assisted living facility that is nice, you had best find a way to pay for such care. LTC insurance is a reasonably priced solution – if you purchase it while still healthy enough to get it.
Most people do not even need as much of this insurance as they might think. When someone needs help with day to day activities your budget will change considerably. No second car when one cannot drive. No boat, camper, snowmobile, motorcycle, travel, cruises, etc. Even less eating out if it is difficult to get into the bathroom.
With less toys, travel, golf, etc., most people can put some of their disposable income towards the costs of care. The interest earned on your nest egg can also contribute to the costs. Only the shortfall needs to come from insurance.
Investigating this with an expert who understands the true costs, how care is utilized, who can guide you through how much of the cost you can cover, is essential. We have been doing nothing but LTC planning for 25 years now. We can help you find out how much or how little coverage you need as well as the best prices for you.