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5 things you need to know before buying long term care insurance

Most Americans don’t plan how they will pay for a nursing home or home care if they need it when they are elderly, disabled or chronically ill. Yet, it’s estimated that 2 in 5 of us will need long-term care at some point in our lives. Fortunately, there is a tool that can save us from depleting our savings to pay for this expensive care: long-term care insurance.

This insurance would pay for home care and adult day care services that can keep people out of nursing homes for as long as possible. It could also provide a better and more expensive retirement home that government programs will subsidize.

In general, long-term care coverage should increase your choices – and it could make all the difference in your quality of life as you get older. Of course, many aging people prefer to stay at home, but home health aides cost an average of $21 per hour for a certified aide and $19 per hour for an uncertified aide. A significant portion of this sum would be paid by long term care insurance depending on the policy you purchase. Long-term care policies pay between $50 and $400 per day for care. Most buyers who purchase coverage from private insurance companies expect to supplement it with their social security, pension, or retirement plan. Policies can also pay for nursing home care.

Fill a gap

This insurance, even if it is not for everyone, seems to be gaining ground. Among Americans 65 and older, about 15% have LTC insurance, according to the national trade association, America’s Health Insurance Plans (AHIP). But even so, only a small percentage of nursing home bills are paid with this type of insurance, according to the Health Care Financing Administration. Reviewers say the blanket may not be worth the expense. Although the average stay in nursing homes is around 2.3 years, around half of those in need live there for less than 90 days. But many say it fills a huge need. Private health insurance only pays for medical care, and Medicare covers a limited portion of long-term care for only 100 days after a hospitalization — and that’s only for short-term “skilled care,” not long-term care. duration. As a result, many consumers are quickly spending their savings paying for child care. And they have to spend every penny to qualify for Medicaid (MediCal in California), the government program that provides long-term care to the poor.

Whether or not this is best for you is up for debate, but the benefits are more evident for middle-income earners. The wealthy can afford to pay for home care, assisted living, or nursing home care out of pocket, and it would be foolish for the poor to buy this expensive insurance when Medicaid is available to them.

But for middle-income people who can afford the premiums and don’t want to see their savings and investments disappear quickly, long-term care insurance is probably a smart choice. The United Seniors Health Cooperative, a consumer health insurance organization in Washington, DC, says it’s useful for protecting assets of $75,000 or more per person in a family. “We think if you’re middle-income, long-term care insurance makes a lot of sense for a fairly affordable and stable premium,” said HIAA spokesman Richard Coorsh. “You have more flexibility as to where you can stay when you have more financial freedom. Otherwise, your choice will be in a nursing home that takes Medicaid assignments.

So why would you buy this insurance?

People buy this insurance for various reasons: They don’t want to be a burden on their children in the future. They have important assets that they want to pass on to their children and grandchildren and therefore need to protect them. And they want peace of mind that they will have good care choices if they need it and not be limited to facilities that accept Medicaid — something that varies from state to state.

“It’s for people who can afford it and have good reason to buy it,” says Priscilla Itscoitz, AARP’s expert on the consumer aspects of long-term care insurance.

RELATED: Everything You Need to Know to Prepare for Medicare Open Enrollment

The best time to buy

Most people buy this coverage when they’re in their 60s, but many experts say there’s no better time than the present, especially if you’re in your 40s or 50s and in good health. . Applying when you’re well means you won’t be rejected due to pre-existing conditions that are more common as people get older. And young people enjoy a significant financial advantage: premiums are determined based on your age at the time of purchase. Additionally, all premiums are expected to remain at the same rate for the life of the policy. Insurers say small increases will be applied over the years to groups of policyholders, such as people in certain age groups or people who bought policies in a given year. Individuals will not be targeted for rate increases as they age or become ill or mentally incompetent. Coorsh notes that increases must be approved by state regulators.

Read the fine print

Disturbing reports have recently surfaced of some policyholders who have suffered exorbitant rate hikes and been forced to cancel. Then they discover that in the years that have passed since they purchased the insurance, they have had too many medical problems to