Did you know that over 60% of people over the age of 65 will need some form of long term care services? Long term care becomes necessary when an individual has difficulty, or is unable to perform, what the industry terms ADL’s, or the activities of daily living. These activities include bathing, eating, walking and dressing.
Many assume that their current health insurance plans or Medicare will cover the cost of long term care. This is NOT the case. Long term care (LTC) benefits are typically only offered through specific long term care insurance policies. It’s best to address long term care insurance before you need it, and the earlier you purchase a policy, the lower the rate you can lock in.
We are often asked if everyone needs a long term care insurance policy. For most individuals, our answer is yes. The cost of long term care can easily top $100,000 annually for specialized needs, and not knowing what life changes are in your future, its best to know the cost when planning for retirement, and long term care insurance can help in that respect as well.
There are typically two types of LTC insurance policies:
- An indemnity or “per diem” policy pays up to a fixed amount regardless of the cost. The payments may range from $50 to $300 daily for a facility that offers long term care. This type of policy should offer an adjustment for inflation to account for higher expenses down the road, be sure to check the particulars of the policy for this.
- An expense-incurred policy allows you to choose the benefit amount when you buy the policy and you are reimbursed for actual expenses for services received up to a fixed dollar amount.
How much is long term care insurance? Of course, the cost varies widely, but national rates in 2007 according to the U.S. Department of Health and Human Services are as follows:
|Average Annual Premium amounts 2007|
|Under age 40||$ 881|
|40 to 49||$1,781|
|50 to 59||$1,982|
|60 to 64||$2,249|
|65 to 69||$2,539|
|Age 70 and older||$3,026|
To ensure you’re adequately covered, you should include long term care as part of your estate planning process. It is an issue that should be addressed sooner rather than later to properly plan those ‘golden’ years.