Weigh the Options of Long Term Care
Author
Thomas Wiest
CEO, Aspirience Home Care
It’s easy to see why nursing home insurance can be a hard sell. Who wants to buy a ticket to a place that most of us dread?
I have spoken to several people in the insurance business and they say clients who refuse to consider the product are cavalier. Many think that if they run out of money the government will take care of them.
Apparently, people are counting on that. Sales of long-term care insurance have decreased since September 11, 2001. Seventy-three percent of baby boomers in Minnesota have no long-term-care insurance at all. Recently, I wrote that the people who buy long-term-care insurance are those who have watched loved ones (and their lifetime savings) deteriorate in nursing homes. Many readers, especially those with loved ones in nursing homes, wanted more information about choosing a policy.
Unlike life insurance, long-term-care insurance premiums are not locked in. They probably will increase, but the amount has to be approved by the Department of Commerce. Consumers comparing policies should ask agents about any premium increases in the previous 10 years.
Most policies include assisted living and home health care in addition to nursing home care, but the coverage will vary.
Three important coverage items to consider are the maximum benefit per day, the length of coverage and the elimination period (the number of days you must wait before benefits begin).
Many policyholders choose a benefit of about $150 per day (which might not cover the full cost in some care facilities), but not all long-term-care policyholders choose coverage to cover the entire daily cost.
Most experts recommend a benefit period of three years or longer because the average stay in a nursing home is 2.5 years, but home health care or assisted living might last longer. Some policies have coverage as long as seven years.
Few policy’s have coverage on Day 1 in the care facility or at home. Most policyholders choose a 90-day elimination period, but with considerable savings, you might be able to wait 180 days or longer.
Verify that a policy includes ALL of the following types of care: nursing home, assisted living, home health, adult day care and alternate or respite care.
Get quotes from at least three companies. Ask your agent to compare the benefits, strengths and weaknesses of each policy.
Buy inflation protection unless you think you might need benefits within a few years. Many agents recommend 5 percent compounded inflation protection.
Check out flexible payment options. With the 10-pay plan, consumers can pay a higher annual premium for 10 years and pay no premiums after that. Another plan allows the premium to be paid in full when the insured is 65. Premiums can cost more than twice the normal price up front but render savings in the long run. For those who worry about paying premiums without ever collecting, “return of premium” policies offer a refund to the insured’s estate or beneficiaries if benefits are never collected.
Review exclusions with your agent. Red flags include: policyholder must be hospitalized first before being eligible to receive home health care or nursing home benefits, policyholder must first receive skilled nursing home care before receiving intermediate or custodial nursing home care, or policyholder must first receive nursing home care before being eligible for home health-care benefits.
Here are some costs to consider, average monthly rates for common long-term care options statewide as of 2006:
$5,340: Nursing home (private)
$4,890: Nursing home (semiprivate)
$2,430: Assisted living
$21 per hour: Home health aide (medical assistance)
$17 per hour: Homemaker services (cleaning, cooking and other household assistance)
Here are some long-term care options for those who don’t want to live in a nursing home:
Independent living/senior housing: Good for people who don’t need care. Typically apartments and facilities that provide security but no other services.
Assisted living facilities: Good for those who don’t require constant care but can’t live alone. Individual apartments with access to services such as meals, laundry and medical care.
Home health aides: Work in a private home and can give medication, check respiration, pulse and blood pressure.
Personal Care Assistants: Provide companion, bathing, housekeeping, cooking and other routine assistance.
As you can see, there are several items worth looking into for long-term-care but, rest assured we can help.
It’s important to know, Aspirience Home Care can help with long term care by keeping your loved ones at home where they are most comfortable and safe.