Experts will tell you that if you live a long life, it’s quite likely that you’ll need what’s referred to as long-term care. The term generally refers to non-medical care for individuals who need assistance with basic daily activities such as dressing, bathing and using the bathroom. Long-term care can be provided at home or in facilities that include nursing homes and assisted living.
Should you ever need this type of assistance, it is important to understand that little of the cost is covered by Medicare or any private insurance. You will either pay from your own savings or, as most people do, rely on family members and friends to provide needed care.
For low-income individuals, Medicaid can be an option. The public health insurance program provides health care coverage though what is available can depend on many factors.
The other option available is purchasing a private long-term care insurance policy. Some 8 million Americans currently have some form of this protection that pays for qualifying care. Services might include in-home care, nursing home care, hospice care or qualifying care in assisted living facilities. Homemaker and personal care services as well as even home modifications can be covered.
Long-Term Care Insurance Pricing Varies
The cost for an insurance policy can vary significantly according to the 2021 Long-Term Care Insurance Price Index. The annual analysis by the American Association for Long-Term Care Insurance (AALTCI) reported that a couple both age 55 could generally expect to pay between $2,080 and $5,025 combined yearly depending on the benefits and options included with the coverage.
Picking the amount of desired insurance protection can be a daunting task. Some individuals will never need long-term care. Others can need care for five years or more. Forecasting your individual potential risk 10 or 20 years in the future is the reason many people give for not purchasing insurance coverage.
Some current data regarding long-term care insurance claims may provide some valuable planning guidance.
How Likely Are You to Need Long Term Care?
A woman currently age 65 faces little risk of needing long-term care at that stage of her life. If she lives to age 90, however, the probability she will require care is 58.3 percent. In other words, 1 in 2 women who reach that age will need care before they die. At age 85, the risk of needing care will impact 43.9 percent of women according to AALTCI.
The probability of needing care at the oldest of old ages is slightly lower for men. Just over half (51.1%) of men who reach age 90 are projected to need care. At age 85, the likelihood is 38.7 percent. Does that mean men should not buy long-term care insurance? It’s still wise to consider – especially since their cost will be less than the cost of equivalent coverage for a female applicant.
Ages When Long-Term Care Insurance Claims Begin
The vast majority of long-term care insurance (LTCi) claims begin after policyholders turn age 80. Some 27 percent of new LTCi claims began between ages 80 and 84. Another 23 percent between 90 and 94 with 1-in-10 after age 95.
It is important to understand that insurance generally should be purchased before turning 65. Traditional long-term care insurance policies generally accept new applicants up to age 75. While some linked-benefit policies that combine life insurance with long-term care can be obtained after age 75, they tend to be costly.
Experts will tell you that the best time to get long-term care insurance is when you can health qualify for coverage and afford the yearly payments. After age 65 more than half of individuals who apply can be declined because of existing health issues.
When Do Individuals Utilize Their LTCi Insurance Benefits?
Living that long life brings along with it many health issues that often require care. Some conditions like Alzheimer’s disease or other cognitive problems are increasingly prevalent among older individuals.
Cognitive issues make up 16 percent of long-term care insurance claims that last one year or less. They comprise nearly half (49%) of claims that last more than a year. The cost of long-term care insurance is based on the amount of potential claim benefits you might receive. In simple terms, a policy that has the potential to pay out $400,000 will cost twice the amount of one with a maximum benefit potential of $200,000.
Cancer is the leading final diagnosis among claims lasting a year or less. It is only 4 percent for claims lasting more than a year.
Finding The Best Long-Term Care Insurance Rates
Consumers have a complex array of long-term care insurance options available today. There are traditional health-based policies as well as a growing number of linked-benefit products. Costs for virtually identical coverage can vary significantly as can important benefit features and plan options.
Working with a specialist can help you get the best long-term care insurance costs and a comparison of the different options available. If you have some existing health conditions or take commonly-prescribed medications, it can help you avoid being rejected for coverage.
The American Association for Long-Term Care insurance can answer general questions and help individuals connect with knowledgeable insurance agents. The organization’s website is an excellent place to find the latest information regarding policy pricing and claims paid.
About Jesse Slome
Medicare Expert – Director Long Term Care Insurance Association, Medicare Supplement Insurance & Critical Illness Insurance Association