Long-Term Care Insurance

Usually less expensive the earlier you begin coverage

When I discussed Medicare a couple of weeks ago, you may have noticed that I didn’t cover long-term care. In general, people who require long-term care are not sick in the traditional sense; instead, they are unable to perform the basic activities of daily living (ADLs), such as bathing, dressing, eating, toileting, getting in and out bed, eating, and walking.

Here are some eye-opening statistics from the Long Term Care Insurance National Advisory Center:

• In 1994, 7.3 million Americans needed long-term care services, at an average cost of nearly $43,800 per year.
• By 2000, this number increased to 9 million Americans, at nearly $55,750 per year.
• The cost today (2010) is near $75,000 per year.
• By 2030, those needing long-term care will increase to over 23 million Americans, with projected individual long-term care costs reaching $300,000 annually.

I believe that long-term care insurance should absolutely become a part of your insurance portfolio. As with other insurance policies, various options are available to suit your needs. Anyone over the age of 55 should consider purchasing one right away—the sooner the better, because it’s usually less expensive the earlier you begin coverage. Most people have to be talked into getting long-term care insurance, but I can’t tell you how many times my clients have benefited from having it, or suffered because they chose not to purchase it.

Long-term care insurance rates are determined by six main factors: the person's age, the daily benefit, how long the benefits pay, the elimination (or waiting) period, inflation protection, and the health rating (preferred, standard, substandard). Another interesting statistic is that the average age of purchasers has dropped from 68 years in 1990 to 61 years in 2005.

To get the most out of long-term care insurance, assess your current health care needs. Do you have any serious ongoing health issues, or are you relatively healthy? I realize that nobody has a crystal ball. Mine broke a long time ago, so I can’t tell what the future holds, but long-term care insurance may take care of the extraordinary needs of an elder in a health crisis.

Long-term care insurance usually activates the moment the need is there. The particulars will obviously depend on your policy, but most cover home health care, assisted living, adult daycare, nursing homes, and Alzheimer’s facilities. It will also pay for a visiting or live-in caregiver, companion, or private nurse. Some policies have a component that allows a geriatric care manager to do an initial assessment and then put that level of care in place. Some other policies offer a lump-sum payment and allow you to spend it as you see fit.

So I suggest you be proactive, purchase a long-term care policy, prepare for the worst, and hope you never need it. But enjoy the peace of mind you will have knowing that if you do require help, you’ll be taken care of in your time of need.

By Dr. Marion
Elder Care Made Easier Blog

[A version of this blog originally appeared on Dr. Marion’s Web site.]