Long term care insurance is often top-of-mind as people age and begin planning their retirement and financial future.
The purpose of a long term care insurance policy is to help policyholders cover the costs of various types of long term care (such as a nursing home or other skilled care) as they age and can no longer perform these essential daily actives.
As with any other financial decision, consumers typically like to weigh their long term care options and consider whether or not coverage (and the corresponding monthly premium payments) is worth having. However, when one considers the alternatives to putting a long term care insurance plan in place, coverage begins to look more and more prudent.
The first long term care insurance alternative is Medicare. Medicare is designed to pay for short hospital stays. It pays for skilled care and was never designed to pay for custodial care, which is help with activities of daily living (ADLs) such as bathing, dressing, eating, transferring, continence and toileting. As a result, Medicare provides very limited, to no long term care coverage at all.
The next long term care insurance alternative is Medicaid. Medicaid is reserved for those who have limited assets and income. Medicaid will pay for long term care under some circumstances, but that care is usually provided in a nursing home setting. And, of course, you must prove that you don’t have the means to pay for care yourself before you can qualify for Medicaid. In other words, Medicaid benefits only kick in and cover long term care costs once you have gone through your savings and available assets.
The last long term care insurance alternative is self-insuring, or paying for long term care yourself. This may seem like a reasonable option, however, when you consider that the average cost of nursing home care in New York has surpassed $130,000 per year for a semi-private room, and estimated health care costs for retirees is up over 70% since 2002 self insuring your long term care becomes a very expensive proposition.
Now that you know more about long term care insurance and alternative options, consider taking some initial steps towards developing your long term care plan. Having the right strategy in place could be the difference between financial security and mounting expenses as you age.
Contact Schneider & Shulman Associates today to speak with one of our expert long term care insurance brokers.