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Health Insurance & Financial Implications of Long-Term Care

If you’re concerned with long-term care for yourself or a loved one, you may be in for a bumpy ride when it comes to figuring out payment options. Medicare and Medicaid raise as many challenges as they address, so many of us are considering or already have long-term care insurance. Here are some key considerations if you’re still debating your options.

Timing

The best time to buy long-term care insurance is long before you need it. The best age, according to the American Association for Long-Term Care Insurance, is in your mid-fifties. There are two reasons for this. For one, your rates are based on your level of health at the time you apply. The longer you wait to apply, the more you’ll have to pay. Furthermore, the percentage of applicants declined due to their health increases with each passing year. By the time you reach age 60, your odds of acceptance drop from 62 percent and the average for those ages 40-49 drops to 38 percent.

Age of Your Policy

However, there is — as always — a catch. Those of you who had the foresight to buy long-term care insurance in the 1990’s are likely noticing skyrocketing premiums now. What’s worse, says US News and World Report, those older policies may not even provide the coverage you expected at the time — or may need now.

Flexibility

As medical care evolves and more of the population ages, some insurers have thankfully taken measures to keep up with the times. As a result, some policies now include allowances for in-home care as well as skilled nursing facilities, and other types of coverage that did not exist with older policies.

Alternatives to Long-Term Care Insurance

Whether you feel that long-term care insurance isn’t the right fit for you, or if your age or health put it out of reach, there are alternatives you should be aware of. Among them:

  • Short-term care insurance typically caps coverage at one year but also comes at a lower premium. It’s often a viable alternative if you’ve been turned down for long-term care insurance.
  • Life/long-term care insurance combines the features of both life and long-term care policies. One benefit is more price stability than is often seen in long-term care insurance.
  • Long-term care annuities may be a viable option if you already have a diverse retirement portfolio. The payouts aren’t enormous, but these are often a good supplement to the other options listed here.
  • Health savings accounts (HSAs) are typically bundled with high-deductible insurance policies, but these too can be tapped in order to defray your costs.
  • Home equity is also an often-overlooked source of funds for long-term care, whether in the form of a home equity loan or a reverse mortgage.

Employer-Based Health Insurance

Finally, a word about employer-based health insurance. Because it’s intended for individuals who are still in the workforce, and who would be returning there after an illness, it is not suited to the needs and challenges of long-term care.

Princeton Health Care Center is the largest and longest-serving dementia care unit in the state of West Virginia. We welcome your questions, be they related to care or to finances. Our answers are based on our decades’ worth of experience helping families with long-term care for those they love.

Note: The preceding are only guidelines and should not be construed as legal advice; for full details on your rights and responsibilities, consult with Princeton Health Care Center or with an expert in elder care.


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