KFOR-TV: Is Long-Term Care Insurance Worth It?
How to Decide if LTC Insurance Fits Your Retirement Plan
Watch Segment on KFOR-TV
It’s a decision many baby boomers grapple with: Should I buy long-term-care insurance?
Long-term care – which encompasses in-home care, assisted living facilities and nursing home care – is very expensive and is not covered by Medicare or private health insurance.
Average costs for nursing home care today in Oklahoma is over $65,000 per year, while annual assisted living and in-home care runs around $54,000 and $67,000 respectively.
But long-term care insurance is pricy too. Depending on your age, health, and the provisions of the policy, premium costs can range anywhere from $5,000 up to $7,500 a year for a couple’s combined policy.
Who Needs LTC Insurance?
There are two key factors you need to consider that can help you determine if purchasing a long-term care (LTC) insurance policy is a smart decision. One factor is your financial situation and second is your health history. Currently, around 7.5 million Americans own a policy.
While national statistics show that about 70 percent of Americans 65 and older will need some kind of LTC, the fact is, many people don’t need to purchase a LTC insurance policy.
The reasons stem from a range of factors, including the fact that relatively few people have enough wealth to protect to make purchasing a policy worthwhile. Seniors with limited financial resources who need LTC turn to Medicaid to pick up the tab after they run out of money.
Another important factor is that most seniors who need LTC only need it for a short period of time, for example, when they’re recovering from surgery. For those people, Medicare covers in-home health care and nursing home stays of 100 days or less following a hospital stay of more than 3 consecutive days.
So, who should consider buying a policy?
LTC insurance make the most sense for people who have investable assets of $200,000 to around $2 million that they want to protect. Anything less, and you will likely deplete your resources and go on Medicaid for LTC coverage. Anything more, and you can probably afford to pay for care yourself.
Another factor to weigh is your personal health and family health history. The two most common reasons seniors need extended long-term care is because of dementia and/or disability. And, almost half of all people who live in nursing homes are 85 years or older. So, what’s your family history for Alzheimer’s, stroke or some other disabling health condition, and do you have a family history of longevity?
You also need to factor in gender too. Because women tend to live longer than men, they are at greater risk of needing extended LTC.
Choosing LTC Coverage
You can buy LTC insurance from an insurance company or through an agent. Or you might also be able to buy a policy at work. Be sure to get quotes from several sources for the same coverage to compare prices.
There are two main types of long-term care coverage you’ll want to consider. Traditional LTC insurance, which is “use it or lose it.” And hybrid policies that combine LTC coverage with life-insurance benefits. These policies promise that if you don’t end up needing long-term care, your beneficiaries will receive a death benefit. Both types of policies require medical underwriting to qualify.
Another hybrid product to consider is an income annuity that includes a provision to increase your payout if you need LTC. However, the payout may not cover the full cost of care, and the