Long-term care insurance
Individuals plan for many different
scenarios: buying a home, putting
kids through college and saving for
retirement, among them. Quite often
the concept of making arrangements
for one’s golden years is placed on the
back burner. However, that can be an
expensive mistake.
According to AARP, by the time a
person reaches age 65, he or she has
a 50-50 chance of needing long-term
care at some point in the future.
Medicare, the federal health insurance
program for people who are 65 or older
in the United States, does not cover
custodial care, which is the primary
form of care in nursing homes. Therefore,
many people must find alternative
ways to finance nursing home and
other long-term care options. Those
who must pay out-of-pocket spend an
average of $85,000 per year on a nursing
home in the U.S., and this is often
an expense that has not been included
in retirement budgets.
Long-term care insurance can be the
best option to offset the high costs of
nursing home and other care in most
instances. It helps cover the costs of
services that aren’t covered by regular
health insurance, namely assistance
with routine daily activities like bathing,
dressing or getting in and out of
bed, advises the financial
resource NerdWallet.
Such care may be
administered at home
by a private health aide
or in a skilled nursing
facility. Most policies
also will reimburse for
services rendered in an
assisted living facility
or an adult day care
center.
According to a study
revised in 2016 by
the Urban Institute
6
and the U.S. Department of Health &
Human Services, about 14 percent of
people age 65 and older will require
care for more than five years. Getting
the facts about long-term care
insurance can help individuals make
important decisions for their futures.
• The earlier a person buys a longterm
care insurance policy the lower
the rates tend to be. The American
Association of Long-Term Care
Insurance says a 65-year-old couple
can typically buy a policy for $4,800
per year to offer base benefits of
$180,000 plus 3 percent inflation
growth. That plan price more than
doubles if purchased at age 75.
• Cost also is based on the maximum
amount the policy will pay per day
and the number of years the policy
will pay. Many policies limit how
long or how much they will pay,
some between two and five years,
states the Administration on Aging.
• Policies require some medical underwriting,
so not everyone will qualify.
• AARP suggests seeking out an
independent agent who sells policies
from multiple companies rather
than a single insurer.
Long-term care insurance can be an
effective way to pay for the often high
cost of skilled nursing care.