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May 2017  Volume 10, Number 5        

long term care

How Long-Term Care Insurance Can Help You Avoid a Nursing Home Stay

Long-term care insurance is best known as a way to cover nursing home costs, but most claims are for in-home care.

The American Association for Long-Term Care Insurance reports that 54 percent of new claims were for home care, and most claims begin and end with home care. Slightly more than 30 percent of new claims began in a nursing home.

The emphasis on home care led an executive with the association to suggest that long-term care insurance was actually “nursing home avoidance insurance.”

Falls are the leading cause of injury for the elderly, according to the National Center for Injury Prevention and Control. Using long-term care insurance to pay for in-home care can delay the need to go to a nursing home by preventing further injury and providing proper nursing care.

What Home Care Involves

The primary goal of home care is to let an individual, regardless of age or infirmity, live on their own as long as possible. Staying at home allows patients to be near the people and things they love while maintaining their daily routine as long as possible.

Home care services often include:

  • Homemaking – Cleaning, companionship, meal preparation, medication reminders.
  • Daily living assistance – Bathing, dressing, grooming.
  • Nursing care – Checking vital signs or performing comprehensive health evaluations without having to go to a healthcare facility.

Long-term care insurance reimburses policy holders for either agency or private home care assistance. However, there may be a waiting period before benefits are paid. A policy with a 90-day elimination period could cost the policy holder $22,500 out-of-pocket for nursing home care. The longer the waiting period, the lower the premium. A typical coverage period lasts three to five years.

In 2016, it cost $7,698 per month for a private room in a nursing home; while the cost of a home health aide was only $3,861 per month.

What to Consider When Choosing a Home Health Caregiver

Many people turn to home health agencies for care because they usually provide a high level of care. Plus, home health caregivers are trained, bonded and insured. This ensures families that they are bringing someone into their home who is skilled and can be trusted. The agency also will handle any legal issues which may arise from the caregiver or client being injured.

Private contractors usually cost less, but might not have been background-checked. Clients are liable for payroll taxes and must cover the cost of work-related injuries.

Home care services through an agency usually cost $14 to $28 per hour. Most individuals need 20 hours of home care each week for about six months. The cost of long-term care is expected to increase more than 330 percent in the next 30 years to more than $300,000 a year for a home care aide and even more for a nursing home.

What to Consider When Buying Coverage

Before purchasing coverage, you should determine whether the cost of paying premiums for a number of years will be worth the expense. Many people overbuy long-term care insurance, so you need to decide how much coverage you’ll need based on your health and your family’s health history.

Most people only need enough to pay for a short stay or for a few hours of home care each week. The Center for Retirement Research at Boston College found that men who need nursing home care stay 11 months or less, while women stay about 17 months. Patients who are suffering with dementia are the exception and can spend years in a nursing home.

The National Long-Term Care Insurance Price Index categorizes long-term care planning as “good, better and best:” Good coverage provides benefits for as many as 360 days with a benefit pool that increases annually. This usually is sufficient for most people. Another group, the American Association for Long-Term Care, reports that 41 percent of long-term care insurance claims end within a year. Therefore, a married couple who are 60 years old and pay $2,050 per year would get “good” coverage; $2,170 for “better” services; and $3,790 for the “best.”

If you’re looking for ways to save money on a long-term care policy, consider:

  • Purchasing a policy sooner rather than later, because insurance premiums cost less when the buyer is younger.
  • Choosing a shorter benefit period.
  • Choosing a longer waiting period.
  • Choosing a higher level of inflation protection (experts advise that anything less than three percent won’t keep up with rising long-term costs).
  • Purchasing coverage while you’re still in good health to avoid being denied coverage (one-fourth of applicants age 60 to 69 are denied coverage; 40 percent of those age 70-79 are denied)
  • Choosing a shared care rider if you’re married so that spouses can dip into the other person’s benefits if needed.

We can help you find a long term care policy that best fits your needs and budget.


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In this issue:

This Just In...

What Republican Changes to the Affordable Care Act Mean to You

How Long-Term Care Insurance Can Help You Avoid a Nursing Home Stay

How Likely Is Prescription Drug Price Reform?

How to Make Dental Coverage More Accessible to Older Americans


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