If you have been following this series of blogs and are here then it’s likely you have decided long-term care insurance may be a good option for you or a family member.
A few more things to remember before purchasing a policy:
- A policy That requires the insured person to be no longer able to perform more than two activities of daily living. One of these activities should be bathing. The U.S. Department of Health and Human Services 1999 National Nursing Home Survey, reported 94% of nursing-home residents need help with bathing.
- A policy with coverage for care not only in nursing homes but in assisted- living facility as well. Not all assisted-living facilities qualify, policies may specify full-time staff member must be on site 24 hours a day, or require a doctor to be on call. Some policies may require an assisted-living facility to supervise medications.
- A policy including home-care benefits should also offer coverage for adult day care, hospice services, and respite care service.
- Policies Covering future costs. Make sure your policy has inflation protection and that the nursing home coverage limits will cover the charges for care in a nursing home you are likely to be living. If the benefits won’t cover today they aren’t likely to cover decades from now either. The best option right now pays 5% a year compounded, which is to keep up with the anticipated 5.6% annual increase in nursing-home charges. The problem with this benefit is that it may quadruple your premium rates.
- Indemnity or per Diem plan options are policies that agree to pay the full daily nursing-home benefit you select no matter what the actual charges are. The insured (you) can keep any surplus, however these policies only pay up to a specified amount. Insured run out of benefit money. Many of the newer policies, are reimbursement plans, and pay only the charges you actually incur up to the selected daily benefit. Indemnity plans may add about 10 percent to the premium rates.
Other things to consider about Long-Term Care Insurance:
- A four-year benefit plan may be enough for most people. Statistics indicate that almost 90% of all people 65-years and older entering a nursing home stay fewer than five years. Current residents stay an average of 2 1/2 years. It could be a risk, but if you are willing to accept the risk a four-year benefit may be far more affordable. If nursing-home care were to be needed for a longer period of time, the four years offers the family time to prepare for the financial costs of a longer care.
- Some people pay to get some money back if you have to cancel your plan. Adding a non-forfeiture clause to the long-term care insurance policy allows you to collect a daily benefit when you need long-term care based on the amount you paid in. Only claims for as much as you paid in will be covered, and inflation won’t be covered even if you paid for inflation protection. The non-forfeiture provision adds 30% to the premium rate.
- The premiums may be partially deductible. There are some “tax-qualified plans,” which meet the federal standards, and allow deduction of the annual premium up to a limit based on age. However, as in the case with other medical expenses, the amount is deductible only if it exceeds the federal government’s 7.5 percent threshold of adjusted gross income. In the end you may be able to deduct only a small portion of the premium costs.
Other Blogs In This Series:
- What Choices Are There When Someone Can’t Take Care of Themselves Any Longer?
- What is Long-Term-Care Insurance?
- Long-Term Care Insurance Options To Consider
- What to Look For Before Purchasing A Long Term Care Insurance Policy
- What Age Is Right To Purchase Long-Term Care Insurance?
- Long-Term Care Insurance Policy Features to Look For
Related Blogs:
- Would Your Family Survive Without You?
- Social Security Disability
- How To Get Information About Medicare
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