Do you need long-term-care insurance?
September 27, 2005
A hundred years ago, people didn’t worry about what would happen to them if they got sick and couldn’t care for themselves. With many generations living together, there was always someone to care for the elderly or the disabled. But today, families are scattered throughout the country – some relocating to full-time jobs in other places. Those who might once have been care-givers now have full-time jobs of their own and are unable to provide care because of distance and time-constraints. Thus, those who can no longer care for themselves must rely on paid professionals.The Likelihood of Needing Long Term CareA person aged 65 faces a 40 percent lifetime risk of entering a nursing home. For a woman aged 65, the risk is 50% and the likelihood of needing nursing home care grows as an individual ages.1 With nursing home costs averaging $50,000 per year (and more than double that in some regions of the country)1, who will pay if you or a loved one can no longer take care of basic needs? Many people mistakenly think that Medicare will cover their bills if they must go into a nursing home or have care at home. But Medicare pays for such care only in limited situations, such as care in a skilled nursing facility after hospitalization-and only for a limited time. Medicare does not pay for personal care, such as assistance in bathing, at home or in a facility. Qualifying for Medicaid, which does pay for nursing home care, requires spending down most of one’s assets. And those on Medicaid have few choices as to the type of care they prefer. 2Long-Term Care Insurance Gives You ChoicesExcept for those who can afford long-term care out-of-pocket, long-term care insurance is the only way to secure the choices of long-term care that are best for you or your loved ones. For example, many people prefer the freedom of receiving care in their own homes, rather than going to a nursing facility. Long-term care insurance can cover the costs of home health care workers, including nursing care, assistance with basic activities, physical therapy and other services, as well as adult day care services, and even informal care from a friend or family member. If out-of-home care is the better choice, long-term care insurance can help pay for the assisted living facility or nursing home of your choice. Deciding whether or not to purchase long-term care insurance is a personal decision. Long-term care insurance may be a consideration for those who have sufficient assets to protect, who want to minimize their dependence on family members and control where and how they receive long-term care services. According to the AARP, a general rule of thumb is not to buy a long-term care policy if you will spend down your assets (excluding your home) within six to twelve months, qualifying you at that point for Medicaid benefits.3Lowering the Costs of Long-term CareUnfortunately, many people don’t even think about long-term care insurance until they need it-but by then, it’s too late. The costs of long-term care insurance will vary, depending on your age when you first purchase it and the extent of your coverage. The best time to think about buying long-term care insurance is in your fifties, when annual premiums are relatively low. Those who wait until they are in their seventies will pay far more-assuming they are still in good physical condition and eligible for coverage. Those over age 85 or who have serious medical conditions, probably won’t qualify for any long-term care insurance. Other factors that will affect price are the amount of the daily benefit (which can range from $50 to $400 per day), and the benefit period. While an unlimited benefit period is available, most people choose a limited benefit period as the most cost-effective. Statistics show that on average, 55% of those who go to nursing homes stay 12 months or more and 21% stay five years or more.You can learn more about long-term care insurance by downloading a free Guide to Long-Term Care Insurance from the Health Insurance Association of America5 at http://www.hiaa.org/consumer/guideltc.cfm or call 1-888-869-4078. Jeffrey Apps & Tracy Tutag offer securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC) 1290 Avenue of the Americas, New York, NY 212-314-4600 and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached at 926.6911 or email@example.comVail, Colorado