Judson Haims: Useful education in long-term care insurance
November 14, 2017
I was recently at Spring Cafe grabbing a coffee when my friend Beth and her friend came over to say hello. After speaking for a while, Beth's friend shared with me her recent experience in assisting her father.
She explained that her father is in his mid-60s, in great shape and lives alone. When her mom passed away not too long ago, the family had spent a great amount of savings paying for both home care and a nursing home. Knowing that her father at some time may also need some care assistance, she and her sister sat with their father and discussed options they could afford.
As the daughters live in other states, and no other family lives in Colorado, the daughters decided to develop a plan for when their father may need assistance. They knew that alone, their father could neither afford the costs of an assisted living facility nor private home care. So, the daughters chose to research available options.
After much deliberation, the daughters decided that the best option was to help pay for Long Term Care Insurance (LTCI) for their father. The LTCI policy they bought will provide $300 a day for either home care or an assisted-living facility, has a 90-day elimination period and has inflation protection. Beth's friend explained that while she and her sister share the cost of the $525-a-month premium, had they known about this option when their mother had been ill five years earlier, they may have paid $100 less a month for a similar policy.
Unfortunately, many of us incorrectly think that health insurance and/or Medicare will assist in providing long-term medical solutions. This is a common misconception that may end up causing many people great amounts of stress and anxiety.
Medicare provides limited benefits that are mainly for some medical visits, brief rehabilitation stays in nursing facilities and limited home care visits that are medically needed. Medicare does not provide for non-medical home care services such as dressing, bathing, basic mobility, medication reminders, transportation and meal preparation.
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If you or a loved one desires to remain in the comfort of home or at an Assisted Living Facility (ALF), you may want to consider LTCI. While some ALFs accept Medicare, the numbers of rooms they offer are often quite limited and book up very quickly. Therefore, to ensure that your desires or the desires of your loved ones are met, financing care at home or an ALF must involve a financial plan. That plan most often happens in one of two ways: self-financing via assets and savings or via an LTCI policy.
I read an AARP article that stated, "Most LTCI experts say the ideal candidates for long-term care coverage are those who can comfortably afford the premiums and can handle premium increases, which are becoming quite common."
According to AARP, "If the premiums are likely to consume more than 10 percent of your income, you probably can't afford the coverage."
LTCI policies are not one size fits all. They are highly customizable and vary greatly in what is covered and is not covered. When considering the purchase of an LTCI policy, you need to educate yourself and find out the specific offerings and exclusions that make up the policy.
Here are some policy details you should research:
• What is the daily coverage amount?
• Will the daily coverage amount be indexed with inflation?
• What is the maximum coverage amount (usually tied to a number of years)?
• What is the length of the elimination period (the number of calendar days before policy benefits are payable to you)?
When I was in college, I don't recall any course that provided education about how to financially plan for retirement and pay for assisted care. If you, your parents or a loved one are not prepared, you might find a lifetime of savings and assets may quickly be exhausted by the costs of an ALF, nursing home or private home care.
We all will need to consider what tools we can put in place to assist us in living the life we choose as we age. This is not a solicitation to purchase LTCI, but it is a reminder of the benefits and that the need for significant resources for your care later in life is real.
Judson Haims is the owner of Visiting Angels Home Care in Aspen, Basalt, and Carbondale. His contact information is at http://www.visitingangels.com/comtns, 970-328-5526.
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