You’ve heard it a thousand times, “You snooze, you lose!” And to some degree, it’s true! Meaning, if you don’t rush out to the store, you’ll probably miss out on that great sale; hence, paying more for that item. But that’s okay, it’s happened to all of us. However, when it comes to long-term care and the rising costs of assisted-living and home-care, I really don’t think anyone is just going to say that it’s “okay.”
If you are like most people, you’ve heard of long-term care; heck, you might have even thought about purchasing it. And like most of the population, you probably feel that it’s a problem that just affects the “older” generation. Unfortunately, that’s not entirely true. Because whether anyone wants to admit it or not, one day we will ALL grow old. The fact is, long-term care is a very real risk and if you have not yet developed a plan to protect your assets and fund a possible long-term care need…then you need to WAKE UP, because your long-term care alarm clock is ringing!
So now that you are awake and thinking about long-term care, you might be wondering what are your options? The first thing that might come to mind is Medicaid, that the government will take care of you. Nope. In fact, with new and constant-changing legislation, Congress has tightened the financial requirements to qualify for Medicaid. Plus, Medicaid is supposed to be for the poor or indigent. You probably should not be qualifying for Medicaid. You might also think of Medicare. But that’s not going to work either as Medicare is designed to cover acute illnesses like hospital stays and doctor’s visits, not long-term care.
The second option you might say is your kids will take care of you. But that’s not a viable solution either. According to a 2012 Genworth Financial survey, nursing-home care is running around $81,000 annually. Chances are your children aren’t saving enough to cover even a one or two year need, much less an extended stay in a facility.
Okay, so who then pays for long-term care you ask? The answer is plain and simple…you. The average person is ultimately responsible for covering their own long-term care expenses. However, trying to come up with $81,000 for one year of expenses, much less several years, might be a bit of a challenge for most. Thankfully, many insurance carriers are offering policies that are specifically developed to provide funding for long-term care. And the answer is…long-term care insurance.
Long-term care insurance is designed to pay a daily/monthly reimbursement or cash benefit when long-term care services are needed. Policies cover care received at home, in a nursing home or in an assisted living facility. Comprehensive policies offer coverage for several different types of care, so it’s really just what you are looking for and when you need it.
There are many things to consider when selecting a long-term care policy, the two main ones being elimination period and premium. Most policies include an elimination period that must be satisfied before benefits are payable. Elimination periods can vary depending on how much a person is willing to pay for their premium. So, a longer elimination period equals a lower premium, while a shorter elimination period will cost them more money of course.
As far as premium goes, that can be a tricky one. Because the older you are when you purchase a policy, the higher the premium will be, AND the more difficult it will be to qualify. In other words, a policy that is affordable for a person in their 50s will be more expensive if they wait until they are in their 70s. And, if their health deteriorates, they might not qualify for coverage at all.
As you can see, it really doesn’t pay to wait. The best and smartest thing that you can do is wake up, realize that the need for long-term care is real, and start researching plans. With the help and advice from a qualified expert, you will be better equipped to make an educated decision about your future. Long-term care insurance…because there’s no snooze alarms in life!
Ray Voelkle, CLTC