Long-term-care (LTC) insurance has been around for more than 30 years, and many people have already decided whether or not they want this coverage. But LTC policies keep changing each year, so it’s worth staying on top of these developments to make sure that you’re still satisfied with having—or not having—this type of coverage.
You already know the basic pitch for LTC policies—with most people living longer these days, many more will need some form of assisted-living support. None of this is cheap. The national average cost for a nursing home is about $90,000 per year, while a spot in an assisted-living facility averages nearly $48,000 a year. What about Medicare? It covers only 100 days of skilled nursing-home care—and only if a doctor certifies that you can undergo rehabilitation so that you can be released following treatment. To be eligible for Medicaid, you must spend basically all of your assets before it pays for a nursing home. Assisted living is not covered by Medicaid.
Most of the changes taking place around LTC coverage are not consumer-friendly, and fewer people are purchasing it each year. Is LTC insurance right for you? What to consider…
Do you have large assets to protect? Unless your estate exceeds $300,000 and you want to save a good portion of that for your heirs, many financial advisers say that LTC insurance isn’t worth the cost. Here’s why: Premiums are hefty. For a healthy 55-year-old, annual LTC premiums start at around $1,000 per year for a limited coverage policy (one that caps the coverage by dollar amount). For someone over age 65, the numbers can be double that. And premiums can go up as you get older. A newer option to consider: Many life insurance companies now sell life policies with a LTC rider, allowing you to start receiving benefits up to the policy’s limits if used for approved long-term care. For details, check with a reputable independent insurance broker who represents a number of companies.
Will I get coverage? With fewer companies selling policies (about 15 in 2019 versus 125 in 2000), insurers are getting stricter on who qualifies. Unlike health insurance, LTC insurers can reject purchases due to preexisting conditions, age or previous denials. Even if you have a LTC policy, denials of claims are quite common.
Should you keep LTC insurance? If you already have this coverage, ask yourself whether you can still afford the premiums. Last year, for example, a Florida insurer won state insurance department approval to double its premiums. If you are unable to cover your normal cost of living, it may be time to simply ditch your LTC policy. Unfortunately, you will lose the premiums you’ve already paid.
Is there a better option than LTC insurance? If you need assisted-living services, such as adult day care or other caregiver-type assistance, check with your county’s Area Agency on Aging. Those offered by state or federal programs often charge on a sliding scale based on need. For-profit and nonprofit groups also offer services such as help with bathing and medication monitoring. Recent trend worth considering: A group of friends hires house cleaners or health aides, sharing the services between them each week. Having a consistent stable of caregivers/providers gives peace of mind—and sharing makes it less expensive.