Planning to cover your own insurance needs, from finding
good personal health insurance to choosing the correct auto
insurance coverages, can be a challenge. Don't forget to
consider your role in caring for aging parents as you build
your insurance portfolio. Between the financial extremes
of abundance (stockpiled cash, trust funds, or earmarked
annuities) and a poverty-based qualification for Medicaid,
choosing LTC insurance becomes more complicated when
considering what's reasonably affordable. The price tag for
three weekly in-home visits seems small compared to
assisted living facilities, nursing homes, or continuing
care retirement communities (CCRCs), but those home visits
might not cover all your real needs.
Payment options are also a sobering concern. If your family
member is a veteran, the Veterans Administration may pick
up some of the expenses related to a stay in a long-term
facility.
Medicare and private health insurance policies do not cover
LTC; they generally cover only medicine and medical
care—though Medicare covers limited short-term care
services if they follow a hospital stay of more than three
days. Medicaid only covers those without assets or income.
An increasingly popular option is LTC insurance. Advantages
include lowered or locked-in rates if purchased well in
advance of its use. Another plus is that most LTC premiums
qualify for tax breaks. Remember, though, LTC insurance
does not provide medical coverage. It is a complement to,
not a replacement for, medical insurance.
Tips and considerations:
* Think about purchasing a policy before you or your parent
reaches the age of 65. Today's healthy 50-year-old pays a
yearly rate of about $1,500 for LTC coverage, while a
healthy 65-year-old might pay $2,000 to $3,500. This
increases in proportion to a decline in health. Overall
rates are expected to increase dramatically in the next few
years.
* Read the fine print! Ask an Elder Law Attorney to check
policies before you sign them. Ask whether the premium can
be modified in the future (e.g., whether additional
coverage may be added, how coverage is adjusted with
changes in health, and whether it would remain consistent
if an emergency evacuation required a move), and at what
price.
* Make sure the policy clearly states what is covered. Some
policies cover nursing home care, but not assisted living;
others are more inclusive. Choosing a limited type of
coverage is often less expensive, but a gamble since need
is hard to predict.
* Check whether the policy includes a waiting period during
which you must pay all of your expenses out-of-pocket
before your LTC coverage kicks in—a kind of LTC
insurance deductible. The downside is that expenses during
this period (called an elimination period) may be very
costly and drain what resources you have. The upside is
that some companies lower their premiums in proportion to
the length of the waiting period, which can be up to 100
days.
* Look at what qualifications the policy requires for
benefits to kick in. Does it require a hospital stay? What
about pre-existing conditions? Does coverage change if
dementia is thrown into the mix?
* Perform a background check on the financial health of
your provider. Companies such as A.M. Best and Moody's do
annual evaluations on all insurance companies, reporting
such events as complaints filed for non-payment. Avoid
providers with reputations for dropping clients when health
status changes.
Finally, for all of these LTC options, remember the bottom
line: Will your plan provide complete coverage, overall
savings, and real value, or merely cut down on
year-over-year cost?
----------------------------------------------------
Ryan Patterson is president of US Insurance Online, based
in Austin, TX. He graduated in 2000 from the University of
Texas with a combined business and computer science degree,
and started US Insurance Online in May of 2005 with fellow
entrepreneur Jim Waltrip. Visit
http://www.USInsuranceOnline.com for help shopping for
insurance and for free insurance quotes.
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