Long-term care insurance can protect personal assets and inheritance for the family, provide greater choice in the selection of long-term care settings (home care, personal care home and nursing home care) and generally provide for financial security.
Because costs for long-term care policies can vary widely, even for similar policies, shopping and price comparison is important.
Long-term care insurance policy premiums are set based on several factors: age, health, length of deductible period, amount paid and duration of benefits. Higher daily benefits and optional features, such as inflation protection and nonforfeiture benefits, increase the premium.
According to the Health Insurance Association of America, the annual premium for a low-option policy for a person at age 50 is about $850 annually; at 65, that same policy costs about $1,800; and at 79, about $5,500. You should consult with your insurance or financial advisor on current costs. Counseling services may help you select a policy most appropriate to your needs.
People purchase long-term care insurance for several reasons. If you are deciding whether and when to buy long-term care insurance, you should consider the following questions:
* Will your income cover long-term care expenses, along with other ongoing expenses?
* If you purchase such insurance, can you pay for the deductible period and coinsurance?
* Can you pay the premiums now? Can you pay if the premiums rise?
* Will you be able to pay the premiums if your spouse dies?
* Will you be able to pay for upgrading benefits to meet inflation?
* Would you become eligible for Medicaid if you had large medical bills, or entered a nursing facility where average yearly costs run almost $30,000?
According to the Centers for Medicare and Medicaid Services, before signing a long-term care insurance policy, you should also ask if you have a period during which to cancel the policy and receive a refund for the first premium. As you shop around:
* Be sure that the policy does not base coverage on medical necessity, or require prior hospitalization before entering a nursing facility, or prior nursing facility stays for home health care.
* Be sure the insurer can cancel your policy only for reason of non-payment of premiums.
* Make certain you have realistic inflation protection.
* Check the length of time that pre-existing conditions are excluded.
* Check for permanent exclusions on certain conditions, such as Alzheimer’s disease.
Finally, if you decide to purchase long-term care insurance, do some checking into the reputation and financial stability of the company offering the insurance.
In 2007, a new law was passed (Act 40) that established the creation of long-term care partnership policies in Pennsylvania. Long-term care partnership policies differ from traditional long-term care insurance policies in that they are required to offer consumers certain options and protections.