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When you’re planning for retirement, whether you’re looking toward the future or you’re due to retire soon, there’s a whole checklist of things to consider. One item you’ll want to make sure to cross off your list is planning for long-term care. From how to make sure you’re covered to which type of plan to choose, we’ve created this guide to explain the basics and help you take steps toward the option that’s right for you.

Before we get into the details of long-term care planning and long-term care insurance, we should define long-term care. People use long-term care when they need assistance with everyday tasks or are unable to live alone. Someone may require long-term care as a result of a chronic physical condition, mental condition, or injury. To qualify for long-term care coverage, an individual will require help with at least 2 of the following: bathing, driving, dressing, eating, getting in and out of bed, maintaining hygiene, preparing food, taking medication, or using the restroom.

Exactly how long care is needed before it qualifies as long-term depends on who you ask. While the U.S. government sets the benchmark at 90 days, insurance plan specifics related to long-term care can vary. Some plans will cover policyholders starting from their first day of care. Other policies may require you to receive care for 30, 60, 90, or 120 days before they begin to pay.

What Is Long-Term Care Planning?

It’s a common misconception that the government provides long-term care for those who need it. In most cases, the answer is no. “Most times, you’re not going to get assisted-living care from the government, unless you’re a veteran or on Medicaid,” USA Today explained, “and that’s typically reserved for the very neediest people.”

Medicare plans do not cover long-term care services, though Medicare covers aspects of medical care that may be provided during long-term care. Medicaid will cover long-term care in some qualifying scenarios. Long-term care isn’t typically covered by health or disability insurance plans, either.

Most of us are left to prepare for the costs of long-term care on our own. This preparation, via savings or long-term care insurance, is long-term care planning. Long-term care insurance is designed to provide the coverage for those who need assistance with everyday tasks that’s lacking in Medicare and other health insurance plans.

Why Is Long-Term Care Planning so Important?

It’s not just important to have a long-term care insurance plan in place—it’s also vital to have an educated perspective of the facts. One reason for this is that consumers tend to grossly underestimate just how likely it is they’ll need this care. In fact, one study found that middle-aged Americans underestimated how likely they were to need long-term care by 500 percent. The reality is that 70 percent of us will depend on long-term care at some point in our lives.

How Does Long-Term Care Insurance Work?

Long-term care insurance helps you prepare for the costs of the long-term care most of us will require as we age. These plans help cover services whether you receive this care in a nursing home, assisted living facility, community-based setting, or in your own home. The following questions and answers will tell you what you need to know about long-term care planning and getting the long-term care insurance plan you need.

When should I purchase long-term care insurance? The decision of when to enroll in a long-term care insurance plan is a personal one. You’ll need to consider your own budget and needs to choose when is best for you. However, keep in mind that your premium is likely to be lower the younger you are when you enroll. After age 60, premiums for long-term care insurance begin to rise steeply. Another important consideration is that the health concerns that accompany aging can sometimes make people uninsurable.

How much coverage do I need? Because of the variety of factors at play—your health, choice of care, personal savings, and more—the amount of coverage you’ll need varies. As an example, assisted living costs average about $36,000 a year, while nursing home care averages $85,000 yearly. The best way to make sure you get the right amount of coverage is to consult with a licensed insurance agent.

How long should I plan to receive long-term care? Like other factors, the duration of long-term care is impossible to pinpoint ahead of time. There are just too many individual factors at play to make an accurate prediction. However, to give you a ballpark estimate, the average long-term care period is 2.2 years for men and 3.7 years for women.

How Much Will Long-Term Care Insurance Cost?

There’s a lot that goes into crunching the numbers when it comes to long-term care insurance. The following factors often come into play.

  • Age: The younger you are when you enroll, the less your plan is likely to cost. This is because as age increases, so does the likelihood you’ll need to use your plan in the near future.
  • Benefit Amount: Both the amount of your daily benefit and your maximum benefit coverage will influence the cost of your policy. Most people choose plans with daily benefits between $100 and $200 with maximum benefit coverage of 4 years or less. The more coverage you’re eligible for, the more you can expect to pay for your plan.
  • Deductible: You’re probably familiar with deductibles on health insurance plans that refer to an amount you must spend before insurance kicks in. With long-term care insurance, your deductible instead specifies how long you’ll receive care before your coverage kicks in. The shorter your deductible period, the more your plan will cost.
  • Inflation Riders: “Riders” are optional additions to your insurance plan that cover specific types of benefits. They allow people to customize basic plans to cover their individual requirements. An inflation rider helps adjust your policy amount for inflation. That means if you buy a $150,000 policy today, it will retain its $150,000 value when you need it. This is an especially important consideration when you realize that the cost of long-term care is rising at 3 times the standard U.S. inflation rate. Granted, it’s the most expensive choice, but a private room in a nursing home is soon expected to exceed $100,000 a year.

About two thirds of the population receives their long-term care from family members. However, a third of those people will eventually move on to a nursing home or assisted living facility. Even for those who never need to check in, however, long-term care insurance can still be a big benefit. A comprehensive policy will cover you while you receive care in your home or a family member’s. That means you’ll be able to use your benefits toward costs such as skilled nursing care, help you receive with everyday tasks, and occupational, speech, physical, or rehabilitation therapy. Some plans also cover “homemaker services” associated with your care. For example, your plan may pitch in to cover housekeeping or meal preparation costs.

We’ve covered a lot of material here, so it’s not surprising if you still have questions about long-term care planning and long-term care insurance. The good news is that you don’t have to face this decision alone. HealthMarkets’ licensed insurance agents are here to help assess your needs and find the policy that’s right for you, at no cost. Give us a call at (800) 642-0607 so we can get started, or search for an agent in your area to set up a meeting today.

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