Thursday July 17, 2008 - Insurance: Long Term Care
Long-term care is simply defined as the care needed for individuals with chronic disabilities, this care may now be in the individual’s home or it may mean custodial care in a nursing home.
Planning for long term care is difficult. Because we don’t know if we’ll ever need it during our life times. Studies have indicated that 40% of Americans over age 65 will eventually need some kind of long-term care. But the key here is for how long.
At age 65 if you have a hip replacement the hospital will discharge you in a week or less. You certainly are not capable of taking care yourself. You are admitted to a nursing home for rehabilitation. Now that stay may be 2-8 weeks depending how quickly you recuperate and then once you are home there may be more care needed. That’s considered long-term care and you are now part of the 40% who will spend time in a nursing home.
According to the U.S. Bureau of the Census, slightly over 5% of the 65+ population occupy nursing homes, congregate care, assisted living and about 4% are in nursing homes at any given time. The rate of nursing home use increases with age and almost 50 percent of those 95 and older live in nursing homes.
The national average annual cost of a semi-private room in a nursing home is $68,000, with it costing closer to $103,000 here in Massachusetts, according to a survey done this spring by GenWorth Financial. That’s about $282 a day. If your income from your pensions and Social Security is about $40,000 a year you will need insurance to provide you with a daily benefit of $173 a day.
The younger you are the less expensive long-term care insurance will be. A 65-year-old in good health (you don’t think they want to insure the sick people do you?) can purchase a good long term care insurance policy with a 90 day waiting period, a 3 year benefit period, $125 a day benefit for either home care or nursing home care for about $3,500 a year.
Start with your employer to see if they offer LTC insurance in the form of a group policy. Get quotes from reputable insurance companies and compare the policies. I got online with several different companies and the price varied as much as $500 for what appeared to be the same coverage. Two things will affect the cost of your premiums, your age and your health. The older you are the more expensive the policy.
Contact the Massachusetts Division of Insurance at 617 521-7794 and ask to receive their Guide for Long Term Care, Your Options for Financing Long-Term Care: A Massachusetts Guide. They also have it available online.
The cost of LTC is a tax deduction if you itemize. The older you are the larger the deduction. It gets lumped in with your medical expenses.
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