Long-Term-Care
Insurance -- Buy Now, Save Later
Fifty
percent of Americans worry that they won't have enough money to pay for
long-term care in retirement -- yet only 18 percent have seriously considered
buying long-term-care (LTC) insurance.1
Although entering a nursing home may seem like a remote possibility today,
there's up to a 50/50 chance that either you or your spouse will need long-term
care after age 65.2 Due to the rising cost of
such care, LTC insurance has become one of the fastest-growing types of coverage
on the market. And because the cost of LTC insurance is largely based on your
age and health, buying a policy while you're still young and fit could help you
save on premiums.
Dispelling Medicare Myths
Some people mistakenly assume that Medicare will pay their long-term-care
expenses. But in reality, Medicare pays for only the first 20 days of skilled
nursing care following a qualifying three-day hospital stay. Between days 21 and
100, you pay $105 a day and Medicare pays the balance. After that, coverage
stops completely. Assuming a room rate of $150 a day, a relatively short
six-month stay could end up costing over $20,000.
People hoping to rely on Medicaid for relief aren't much better off. Before they
can qualify to receive benefits, Medicaid requires them to “spend down”
their personal assets to the legally mandated level.
Choosing
Coverage
Long-term-care insurance usually covers three different levels of care: custodial
care, for those who need help with basic daily functions, such as eating,
bathing, and dressing; intermediate care, for occasional nursing or
rehabilitative services either at home or in a nursing facility; and skilled
care, or daily care provided by a medical professional.
As with so many other things in life, preparation may be the best defense
against long-term-care costs. If you're worried you may not be able to afford
extended care in retirement, now might be a good time to explore your options
for coverage.
1) 2003 Retirement Confidence Survey, Employee Benefit Research Institute
2) 2003 Field Guide, National Underwriter
© 2003
Emerald Publications
