Insurance and Assisted Living Costs

Just realized that you may need senior living care, but you haven’t planned for it? Well, you’re not alone. Very few people do. In some cases, it doesn’t dawn on them that they’ll need it. There are those who think it’s a waste of money, preferring to save the assets for their heirs. Then, there are the people who truly believe the costs will be covered by government subsidies.

And, when it comes to long-term care insurance (LTCI), that’s a tricky subject. Whether you’re an advocate or opponent of LTCI, the option does exist. Yet, all LTCI policies aren’t the same. They include coverage, pay out and timing stipulations that could leave you footing the cost of your care. So, you need to know ahead of time what you’re signing up for, before you actually need long term care.

How to Choose a Long Term Care Insurance Policy

If you already have a LTCI policy, you need to look it over to see exactly what it covers. Are there time restrictions in regards to payouts and coverage? Exactly what types of care and facilities are covered in your policy?

If you’re shopping for a new LTCI policy, these same questions apply. So, do your research, do some comparisons and make sure you ask the right questions:

• Premiums – Is the premium cost actually worth investing in the plan? Are there loopholes that allow them to increase your rates? Generally, financial and consumers experts agree that LTCI policies are not good investments when the monthly premiums are more than 5% of your monthly income.
• Benefits – What will be the daily benefit, initially? What will the maximum benefit period be during the course of the policy? As inflation increases, will the benefit amount also rise? And, if so, how will the increase affect your policy premium?
• Elimination Period – Is there some type of trigger for your benefits to begin? Does the policy have an elimination period before you benefits can become available? What is elimination period? It’s the amount of time that has to pass once the benefit trigger has occurred in order for you to start receiving payments for long-term care services. Generally, this is anywhere from 0 to 180 days. You can get shorter elimination periods, but your premium will increase. Note: Oftentimes, these policies will only pay benefits if you need assistance with at least two of the “six Activities of Daily Living.” An exception would be if you actually have a cognitive impairment.
• Exclusions – What is excluded from coverage? What percentage of housekeeping assistance, assisted living, home care, memory care or hospice care is actually covered? Does your LTCI policy even cover assisted living costs?
• Reimbursements – How do reimbursements work? Does the policy only reimburse you for actual expenses? Or, do you actually get cash back to use as you choose?
• Medicaid – What type of Medicaid interaction does your policy provide?
• Future Benefits – Does your policy include an option for inflation growth? If so, will the option cost you even more during upcoming years. What will your benefit level be in 10 years, 15 years, even 25 years?

Do your research before you decide to pay for long-term care insurance. You don’t want to find yourself paying for assisted living care costs out of your hard-earned savings.