Wednesday, November 19, 2014

Long-Term Care Insurance -- Should You Buy It?

It may be hard to imagine today, but the time may come when you will have difficulty bathing yourself, getting dressed, preparing meals, eating, moving from the bed to a wheelchair or walker, using the bathroom, remembering to take your medication, or with incontinence.  This situation may come on slowly as we age, or it could happen suddenly as the result of a stroke or accident.  No matter the cause, it is important that you have a plan for dealing with these issues when the time comes.

Cost of Getting Long-Term Care

If you have not properly prepared, obtaining the care you need can be extremely expensive.  Although the exact amount varies across the nation, the Orange County Council on Aging estimates that it can range from $50,000 to $80,000. 

The least expensive type of care is when a family member provides the care you need.  However, this is not always a possibility.  Personally, I know of several widowed, childless men and women.  They have no near relatives who can care for them if they should become incapacitated.

Another option is to apply for MediCal.  This is a government program that covers long-term care expenses for many people.  A company called Nursing Home Solutions provides professional financial planners who can help you see if you qualify for MediCal.  In their ads they say that you do not have to spend down all your assets in order to qualify for MediCal assistance in paying for a nursing home. I am sure there are also other companies that can help you apply for this program.  You can contact Nursing Home Solutions at

The next least expensive type of care is the use of a part-time caregiver in your own home.  The cost becomes more expensive if you need full time care in a nursing home or assisted living facility.

The most expensive care is for those people who choose to have 24-hour caregivers in their own home, since this requires three shifts of caregivers, seven days a week.

What Does Long-Term Care Insurance Cover?

Fortunately, there is a type of insurance that will pay for your care when you are no longer able to take care of yourself.   In California, where I live, these insurance policies must include coverage for in-home caregivers, as well as the cost of residing in an assisted living facility or a nursing home.  This gives you the option to receive your care in the setting that is most appropriate for you and your family.  For example, if your spouse needs long-term care, having this insurance may make it possible for them to stay in your home with you, without forcing you to put them in a nursing home.

Purchasing Long-Term Care Insurance

This type of insurance gives you a variety of options, so different people can choose the amount of insurance they can afford.  You can select a policy that covers your care for a few years, or you can choose one that would cover you for as long as necessary, even if that is the rest of your life.   The shorter the term of care, the lower the premiums will be.

Why Would You Buy a Short Term Policy?

You may be wondering why everyone wouldn't just buy a policy that would cover them indefinitely, rather than have a time limit on it.  Of course, that would be ideal, but it could be too expensive for many people.  When my husband and I purchased our policies, we bought a long-term policy for me, and one that would last a maximum of 4 years for my husband.

Our insurance agent said that you have to look at things practically.  I am more likely to outlive my husband.  If he were to become debilitated, I would probably care for him by myself as long as possible before bringing in a caregiver.  Once we reached that point, four years of long-term care would probably be adequate.

On the other other hand, when I am elderly and losing my ability to care for myself, I probably would not have a spouse to take care of me.  I would need to hire a caregiver sooner and would most likely need the care for the rest of my life.

Based on our conversations with our insurance broker, we purchased the policies that seemed to be affordable and would meet our projected needs the best.  The right policy for you will vary depending on your personal circumstances, such as whether you are single or married, whether or not you have adult children who are capable of providing the care you might need, the health and life expectancy of you and your spouse, and how much insurance you can afford.  Even a short-term policy is better than no long-term care insurance at all.

Whatever you decide, you want to make sure you select a policy that you can afford now, as well as in the future.

What If You Do Not Qualify for Long-Term Care Insurance?

The younger you are when you buy the policy, the better off you will be.  It will be less expensive in your 50's or early 60's and you are more likely to qualify for it.  However, if you do wait until you have a chronic condition and you have trouble qualifying, there are alternatives.  If you or your spouse is a Veteran, you may qualify for $2000 a month in long-term care aid from the Veteran's Administration.  There are also special life insurance policies that include long-term care riders.  You can talk to your insurance agent about those choices.  You may also be able to qualify for MediCal.

Whatever you decide, you need to give this issue some thought and let your loved ones know about any policies you own or money that has been set aside for your long-term care.  You do not want to wait until you are injured and cannot speak for yourself.

If you are retired or planning to retire soon, you will find links to more information about long-term care in the Medical Concerns tab at the top of this page.  You may also be interested in the article links you will find under the other tabs, which cover issues such as financial planning, where to retire, and family isues.


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  1. There is another issue to consider before putting money into this insurance. Will it be there if/when you need it? These companies disappear all the time. Some of them go out of business, or just decided not to cover this type of policy anymore. If either happens, you are out the money you have given them.

    I saw something equally sad recently when premiums for LTC insurance went up astronomically with one large program available for public employees. Those who had been paying for years could not pay the higher rates, lost their insurance and money.

    Honestly, I don't trust this type of insurance. I am putting away $1,000 each month and building up my own LTC fund. This along with my pension should cover the cost of care when I need it.

  2. Hi Elizabeth,

    Fortunately, long-term care insurance is highly regulated both on the state and federal levels.

    This statement you made can't happen: "Some of them go out of business, or just decided not to cover this type of policy anymore. If either happens, you are out the money you have given them."

    Long-term care insurers cannot cancel someone's policy because they don't want to cover them anymore. The regulators won't allow that.

    And, in the past 40 years, only one LTC insurance company has gone bankrupt and those claims are being paid by the insurance "guaranty associations" in each state.

    It is true that most of the older LTCi policies have had large premium increases. To protect consumers purchasing policies today, 41 states have passed strict pricing regulations. Consumers purchasing policies today are protected from the pricing mistakes of older policies.

    Scott A. Olson

    1. Thank you for correcting any misunderstandings of Elizabeth and the others who may feel the same way. My husband and I both have Long-Term Care insurance and it certainly makes me feel much better.


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