Long-term Care Insurance: Seemingly Essential Yet Increasingly Unaffordable

When considering how to pay for your own or a loved one’s long-term care needs, long-term care insurance (LTCI) is often recommended as a way to help cover the costs. Assisted living care alone can cost a staggering 20K to 70K or more a year depending on what level of care is needed.

Older married couple consulting with young female doctor

Medicare pays for less than 20% of long-term care services and only for medically necessary, skilled nursing facilities or home health care for persons who meet certain criteria. It doesn’t pay for the vast majority of LTC costs associated with custodial care (bathing, dressing, eating, toileting, etc.). Medicaid is only available to those who meet financial eligibility qualifications. Likewise, health insurance covers very little long-term care – rather, health insurance covers short term episodes of care typically related to acute health care. Many individuals and families must dig deep to pay ‘out of pocket’ for care or find other private insurance to help.

LTCI is a product designed to pay for costs associated with custodial care. Available from private insurance companies, a variety of plans are offered ranging from nursing home only coverage to those covering in-home care and adult day care. Benefits are priced based on the individual’s age and health status. So, the younger the purchaser the lower the premium typically.  The majority of individual policies require a review of an applicant’s medical history before a policy will be offered. Thus, individuals with pre-existing conditions may be denied coverage, or be required to pay a much higher premium  However, some group policies, offered through an employer, do not require a review of an applicant’s medical history.

Insurers in this industry reportedly have struggled to appropriately “price” their products and therefore have had to raise premiums.  If a person can obtain a long-term care insurance policy, they may be taking a gamble on whether or not their insurance premiums will increase even after they are locked into the insurance and have made regular premium payments. If a premium increase is unaffordable, especially if a person is on a fixed-income, then it may mean no longer making payments and losing the coverage. Useful, objective information about purchasing LTCI is available on the National Clearinghouse for Long Term Care Information: http://www.longtermcare.gov/LTC/Main_Site/Paying/Private_Financing/LTC_Insurance/Buying.aspx

Terry Savage, the national syndicated financial columnist for the Chicago Sun-Times, wrote two good columns focused on long-term care insurance premium rate hikes and strategies for dealing with these hikes.  In her second column, Savage addresses how to deal with premium increases, including opting out of inflation protection, or reducing the benefit period   To read the articles online, follow the links for Chicago Sun-Times: “How is a 90% long-term care rate hike OK?”, and Chicago Sun-Times: “How to handle soaring long-term care rates.”

________

For additional information about long term care insurance, refer to FCA’s publication “Insuring Your Future: What Caregivers Need to Know About Long Term Care”

We are interested in hearing about your experience with LTCI.  Please share your questions and comments.

4 comments to Long-term Care Insurance: Seemingly Essential Yet Increasingly Unaffordable

  • JAL

    Now that 40 states have “LTC Partnership programs” you do not have to buy an expensive “unlimited” long-term care insurance policy. You only need to buy an amount of long-term care insurance equal to the amount of assets you want to protect for yourself, your spouse or partner, and/or your heirs.

    These government-approved policies are like a traditional long-term care policy with additional consumer protection features.

    Here’s an explanation of how these policies work:

    http://bit.ly/How-Partnership-Policies-Protect-Assets

  • Gail Dunn

    It is true that the staggering long term care insurance costs remain to be a major factor on why most people would not buy a long term care plan. But with long term care tax deductions, various available discounts, partnership policies, longer elimination period, etc, there are a lot of ways to save on premiums

  • ada

    Before buying a long term care insurance plan, people must assess first the possibility of requiring long term care in the future. Also, they should look into their capability of paying high premiums and other LTC costs. It’s actually a risk to take but if you want assurance and peace of mind, then it is worth the shot

  • zelle

    LTC may not be for everyone, but those who can afford it can make it a part of their retirement plan. They can gather free estimates from various companies to compare and select which one offers the most affordable price. This video, youtube.com/watch?v=aVc8ZhThCBg LTCI quotes </a< can help buyers better understand the importance of long term care price estimates.

Leave a Reply

 

 

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>