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Long-Term Care Insurance

We don't want to have to think about perhaps not being able to take care of ourselves in the future and require help from others... The million dollar question is: How will I pay for it?

Purchasing long-term care insurance is one way to successfully prepare. Long-term care refers to an array of services that aren’t covered by regular health insurance. This includes assistance with routine daily activities, like bathing, dressing or getting in and out of bed.

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:

  • Your home.
  • A nursing home.
  • An assisted living facility.
  • An adult day care center.

Reviewing long-term care costs is an important part of any long-term financial plan, especially in the ages 50 to infinity and beyond! Not buying coverage until you need care is not an option. You will not qualify for long-term care insurance if you already have a debilitating condition. Most people with long-term care insurance buy it in their mid-50's to mid-60's.

What kind of long-term care insurance is the right choice depends on your situation and preferences.

Before you shop for coverage, it’s important to learn more about long-term care insurance.

Why buy long-term care insurance?

About 50% of people 65 years and older, today, will eventually develop a disability and require some long-term care services, according to the U.S. Department of Health & Human Services. Many will need help for under two years, but many will require care for 5 or more years.

Medicare and regular health insurance DOES NOT cover long-term care. And Medicare won’t come to the rescue, either; it covers only short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.

If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.

People buy long-term care insurance for two reasons:

  1. To protect savings. Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year.
  1. To give you more choices for care. The more money you can spend, the better the quality of care you can get. If you have to rely on Medicaid, your choices will be limited to the nursing homes that accept payments from the government program. Medicaid does not pay for assisted living in many states.

Buying long-term care insurance might not be affordable if you have a low income and little savings. Most experts recommend spending no more than 5% of your income on a long-term care policy.