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Should You Buy Long Term Care Insurance?
Before you are able to answer this question you must believe
a problem exists. No one likes to dwell on the possibility
of needing care in a nursing home, assisted living facility
or care at home. "Yet more than half of all women and a third
of all men who survive age 65 are expected to spend some time
in a nursing home before they die". (Wall Street Journal
2/11/02)
According to the National Academy on an Aging Society, the
number of elderly needing long-term health care is expected
to increase from seven million in 1997 to nearly 10 million
in 2018. (Wall Street Journal 2/11/02) Even more shocking
is the fact that estimates suggest that 40% of those persons
receiving long-term care are not seniors, but are those between
18 & 64. (Testimony submitted to U.S. Senate Special Committee
on Aging 6/28/01)
The truth is most families don't plan for this eventuality.
Rather, they attempt to manage the crisis when care is needed.
If you don't want your family thrust into crisis when
a loved one requires care, ask yourself these questions:
Where will you get care?
Who will coordinate and manage care given?
How will you pay for the care?
If given the option most seniors would prefer to receive
care at home. However, with home health care cost averaging
$18.00 an hour all but the wealthiest risk loosing everything.
Regrettably private or government insurance programs do not
cover most home health care or long-term care needs.
According to New York State the average cost of a nursing
home in 1999 was $192 a day or $72,000 annually. Before the
government will pay you must first become impoverished.
Consider the following:
Medicaid Reserve Asset Regulations 1/1/03
| Married Couples May Keep: |
Single Person May Keep: |
| One Residence (with lien to Social Services) |
$ 3,850 in assets |
| $90,660. in assets |
$ 50.00 per month income |
| $ 2,267 A month in income for at home spouse |
$1,500.00 burial fund |
| One car and personal property |
exempt clothing, etc. |
After meeting the above "spend down rules" the next
hurdle to have Medicaid pay anything is to have stayed three
days in a hospital. If you meet this rule you can look forward
to the following:
Medicaid Reimbursement Limits for Nursing Homes
After a three day hospital stay, nursing home costs for each
benefit period are as follows:
Day 1 – 20 Medicaid pays 100%
Day 21 – 100 Medicaid pays all but the first $101.50
per day
Day 101 - ? Medicaid pays 100% of costs at participating
facilities only
Source, 2002 Guide to Medicaid
Given the uncertainty and limits of Medicare/Medicaid one
must explore alternate payment choices. When doing so remember
average daily cost must be calculated for an unknown estimated
time. Based on New York statistics the average nursing home
stay is almost three years.
Payment options include:
Private Pay: Spending down ones assets to offset cost
of care.
Reverse Mortgage: Limited access to participating
banks that will pay out the value of your home to offset care.
The house becomes bank property.
Life Care Community: This option involves a commitment.
You are choosing not only your housing but also you future
care provider. It may involve a large initial deposit with
on going lifetime monthly payments in return for housing and
care.
Long-Term Health Care Insurance: Allows you to pay
a known premium that offsets the risk of much larger out-of-pocket
expenses.
Of the various options available many people choose long-term
health care insurance. Doing so can help preserve your independence.
Protect the savings and assets you've spent a lifetime
accumulating. Prevents you from having to rely on family and
relatives for support. Provides you with comprehensive benefits
for covered care in your own home, your community, in assisted
care facility, or in a nursing home.
Policies may allow you valuable federal income tax advantages.
Don't allow the unknown risk of the golden years to
put you and your finances in jeopardy. Meet with a Certified
Financial Planner to evaluate planning options today!
Securities offered through Cadaret Grant & Co., Inc. Member NASD/SIPC, PPG and CG are separate entities. Securities and/or insurance products not insured by FDIC/NCUA or any government agency. May lose value. Not a deposit of or guaranteed by any bank, credit union or any affiliates. Licensed in AZ, CA, CO, CT, GA, ID, MA, ME, NC, NH, NJ, NY, PA, VA, VT and WY.
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