Is Long-Term Care Insurance Right For You?

Is Long-Term Care Insurance Right For You?

It’s hard to believe, but nearly three-quarters of adults age 65 and over will need some type of long-term care services in their lifetime.  That equates to a boat-load of money. To illustrate this, the average cost in an assisted living community in New York State is $4100 per month and $11,701 per month for skilled nursing (the national averages are $3750 per month for assisted living and $7418 per month for a private room in a skilled nursing facility - way to go, New York).  One way to mitigate some of these expenses is through long-term care insurance.  But before you pick up the phone to call your insurance agent, please consider the following:

  • Health and Age - your overall health and age drive the costs of long-term care (LTC) insurance - the younger and healthier you are, the less expensive the policy will be.  Makes sense.  However, the younger you are, the more time you have to pay insurance premiums until (and if) you have to tap into your benefits.
  • Elimination Period -  many insurance policies have an elimination or waiting period before they’ll actually start to make payments.  Usually the shorter the elimination period, the more expensive the policy. 
  • Long-Term Costs - premiums for LTC policies (like most other things) increase over time and as you age, there’s a greater likelihood that your income will decrease.  Will you be able to afford the premiums later in life?
  • Medicaid - is Medicaid a better option for you?  Medicaid can cover the costs for a skilled nursing facility in some states and it might even pick up some of the in-home care costs.  However, you must meet Medicaid eligibility requirements and not everyone does.  Enlisting the advice of an elder care attorney or financial advisor who is well-versed in all aspects of Medicaid could be money well spent.
  • Your Circle of Family and Friends - is it realistic to think that your family and/or friends will be available to assist you on an on-going basis?  Really think long and hard about how much you’re willing to impose on others should you need long-term care.
  • Benefit Maximums - like most things, there’s usually a limit as to how much and how long a policy will pay.  Some have daily and/or lifetime maximums.  Be sure to read the fine print.

I’ll tackle more on the subject of Long-Term Care Insurance next week.  In the meantime, I’d love to hear from anyone who has had experience with an LTC policy.  Insurance agents are also welcome to chime in!

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