November is long term care awareness Month, a time to appreciate caregivers and review your financial plan. This year the pandemic hit all parts of the care community– caregivers, staff and patients. More than ever, the crisis highlights the importance of planning.
Long term care awareness care can help with activities of daily living for someone with a disability or cognitive disorder like Alzheimer’s disease. Most care is provided by relatives. When family care becomes too overwhelming, the person moves to assisted living or a nursing home.
In 2020, the coronavirus pandemic brought new crises. Care facilities became hot spots with elevated infection rates for staff and residents. Facilities restricted visitors. Home caregivers lost social outlets as people self-quarantined. In isolation, caregiver stress– always high– skyrocketed.
Those with the foresight to purchase long-term care insurance had a safety net. Benefits cover home health aides and pay for house modifications like ramps, so most policyholders receive care safely at home. Of course, residential care is also covered, allowing access to better quality facilities.
Long Term Care Awareness Month is a good time to consider adding this insurance to your retirement plan.
How Does Long-Term Care Insurance Differ from Health Insurance?
Private health insurance and Medicare cover medical and hospital care to help you recover from illness. Health insurance does not cover long-term care.
If you need help with basic skills, such as dressing and eating, or have dementia, long-term care insurance covers residential care in an assisted living community or nursing home. But people who purchase the insurance intend to remain at home.
Who Should Get Long-Term Care Insurance?
Those turning 65 this year have a 70 percent chance of needing long-term care services in their lifetime. A long-term care event is one of the biggest threats to retirement savings. The median cost of a private nursing room in 2019 was $102,200 per year. Paying such high costs quickly drains retirement assets.
A rule of thumb is if you have more than $1,000,000 in liquid assets, you can self-insure long-term care. Conversely, if you have low income and minimal assets, Medicaid covers nursing home care. Everyone in the middle should look into long-term care insurance.
The first step is research. For an overview of how the insurance works, HealthMarkets provides a useful overview on Everything You Need to Know About Long-Term Care Insurance.
Premiums are age-based, so buying younger allows you to lock in a lower premium. But don’t buy too early because most people don’t use the insurance until their retirement years. However, you don’t want to wait too long, either. As you age, the likelihood increases of developing a condition that would disqualify you for coverage. With some health issues, you will be covered, but your premium will increase by up to 50 percent. The American Association for Long-Term Care Insurance (AALTCI) recommends buying a policy while in your 50’s.
How Much Coverage Will You Need?
Calculate the cost of care in your area and decide how much you want the insurance to pay and the portion you would cover. For example, the median cost of a home health aide in the U.S. was $4,385 per month in 2019. Get a quote for that amount and see if the premium is affordable. If not, decide how much of that cost you could cover and reduce your monthly benefit by that amount.
What Does Long-Term Care Insurance Cost?
Your premium is based on several variables, including your age, health status, amount of coverage and policy maximum amount. Data from AALTCI quotes an average premium for a 55-year-old couple as $3,050 per year. The cost is higher for a single policy, particularly for women. Carriers offer a discount of 10 to 40 percent for married couples who apply together. Buy now if you’d like to take advantage of this discount. Some insurers have raised rates, and experts predict that others will follow. For information, find an insurance agent to answer questions and provide quotes.
The pandemic made managing long-term care events more challenging this year. During Long-Term Care Awareness Month, remember the caregivers in your family. See if you can assist with any relatives who need care. Review your retirement plan to allocate resources for long-term care. If you intend to buy long-term care Insurance, act quickly before the rates increase.