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Understanding Long-Term Care Insurance

Long term care improves and extends one’s life, but it could induce suffering and burden on the person and his or her families when the costs blow the finances away. Read the tips in preparing for long term care costs

Long term care improves and extends one’s life, but it could induce suffering and burden on the person and his or her families when the costs blow the finances away. Long term care insurance is by far more important than any other kinds because it involves health and life, and it protects the person’s wealth against the financial devastation of long term care.

Many people are hesitant in buying LTCi because they are discouraged with the costs of care, or the lack of knowledge on what long term care insurance really encompasses. It is important to understand what LTC insurance is all about to know your options and prepare for the future.

Why is it Crucial? Few people understand why they need to insure their long term care. Assuming the cost of nursing home care today is $70,000 annually for a semi-private room, and then what would be the price in the next five years? The costs of LTC increase every year, so it will be devastating for a person to pay out-of-pocket expenses.

Many seniors also depend on Medicare to shoulder their expenses. In fact, Medicare only pay the first 20 days, but the expenses for the next 80 days require a supplement. Once you used all the 100 days, you won’t ever qualify for the benefits again unless you stay in hospital for 60 days.

What are the types of long-term care insurance policies?

There are two types of LTCi policies:

Tax qualified: The benefits are non-taxable while the premiums are tax deductible. The downside of this is that it is highly regulated: the patient must be disabled who needs care for at least 90 days that should go well with a plan of care as prescribed by a doctor.

Non-tax Qualified: The benefits are taxable, but it is simpler than the previous one. A person can get benefits on any medical condition for as long as doctor determines the care and the insurance company agrees that the claim is legitimate. However, only few companies are offering this type nowadays.

Both types of policies can be purchased as individual policies or group policies.  Always buy a policy that is guaranteed renewable, with 30 days free look period, and can’t be modified freely by the insurer. There are features in most LTC policies so make sure to ask the insurer to explain everything about the contract and the policies.  Transact only in an insurer with proven track record in the industry to secure your finances and your health as well.

Who is eligible for long-term care insurance?

 Middle-aged individuals with good health are eligible for long term care insurance. Those aged 70 and above with a pre-existing condition will not qualify for LTCi and, if they are able to get any coverage, the premiums are more expensive as expected.

 The person’s current state of health and possibility of becoming ill or disabled are main considerations for buying LTCi coverage, even those are still in their 20s, 30s, and 40s can use it as good investment. It applies the rule “early bird catches the worm”: the younger you buy the policy the lower the premiums will become. People already in their 50s should start shopping for LTCi immediately before any health problem strikes.

Article Tags: Long-term Care Insurance, Long Term Care, Long-term Care, Care Insurance, Long Term, Term Care

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