Everything You Need to Know About Long Term Care Insurance

Recent data has shown that roughly half of Americans have medical bill problems or are paying medical debt. It has become a mounting problem for citizens whether these expenses come from prescription drug costs, hospital stays, surgeries, or anything related, and there is a large financial burden as healthcare has become so expensive. A large medical bill can certainly cause a lot of problems and it is important to consider your options when it comes to paying any healthcare costs. 

Once you have your health plan coverage established, you may think you are in good shape to cover costs you may incur. Unfortunately, this may not be the case depending on the specific situation. Many retirees wonder whether or not they should buy long term care (LTC) insurance which covers extended stays in nursing homes. These policies are very expensive in their own right, with many exclusions and limitations, which is why the decision is tough for many people.

While it seems it is be too expensive to dish out the insurance premium for something you might not use, not having it can be much more expensive over the long term if you eventually do need it. According to SeniorLiving.org, the national average cost for nursing home care is between $89,297 and $100,375, although the cost can vary greatly among geographic regions. By comparison, according to Investopedia, LTC premiums average about $2,700 annually, or $225 a month. Significant premium increases can be expected if you wait until age 65 to purchase a policy. 

You will need to take into consideration whether or not a long term care policy will benefit you. For most, the length of stay in a nursing home is less than one year which means the cost of a policy far exceeds the cost of paying for a one year stay out of your own pocket. Most individuals have friends and family who can care for them, so they can avoid the nursing home stay altogether. 

Medicare does not usually cover expenses associated with long term care and it picks up the cost for the first 100 days of a stay in a nursing home as long as certain conditions are met. Medicaid might cover long term care expenses, but it generally doesn’t kick in unless you’re impoverished or until you’ve “spent down” your assets to the level required in your state. When you apply, Medicaid has the right to look back at all your financial transactions over the preceding 60 months to discover whether you gave away your assets or sold them for less than fair market value to qualify for benefits. If so, you could be ineligible for full Medicaid benefits for up to 100 months

Ultimately, your decision boils down to paying long term care costs yourself or transferring some of the financial risk to an insurance company through a LTC policy. Choosing the long term care insurance policy that’s appropriate for you involves a number of variables including your age, health, and financial status. It is important to make sure that part of your financial investment portfolio is devoted to covering medical expenses during retirement. Knowing what private insurance, supplemental insurance and Medicare offers is a must during retirement planning. By understanding all your options, you’ll be better equipped to make an informed decision regrarding your long term care needs.