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Long-Term Care Insurance Shop Around-Buy Only What You Need If you think that Medicare covers the cost of nursing homes, think again. Medicare's coverage of nursing home services is very limited. Long-term care insurance can be used to supplement the limited coverage, but it can be very expensive. What should you do? Here are some tips from the experts: 1. Make sure you actually need long-term care insurance. If you have a sizable nest egg of savings and no need to pass those assets to your heirs, long-term care insurance may not be absolutely necessary. 2. Buy long-term care insurance early enough to get affordable premiums, but when you are old enough that you will not be paying premiums for many years unnecessarily. For example: Age Average Annual Premium 50 $444.55 55 $555.54 60 $771.19 65 $1,087.11 70 $1,699.61 75 $2,864.11 80 $4,667.26 3. Buy only the benefits you need. Bare-bone basics are nursing home care, community-based care such as adult day care, assisted living, and home care. Some non-critical benefits to consider include: • Inflation protection-less important if you will be collecting benefits within the next few years. It is more necessary if you expect to use the benefit 10 years down the road. • Waiver of premium-lets you stop paying your premiums once you've been receiving benefits for a certain length of time. For instance, if a disability or illness prevents you from earning an income, this would allow you to stop paying premiums during that period. • Nonforfeiture-you don't lose what you've paid into your policy even if you stop paying premiums. • Restoration of benefits-even if you've used a portion of your maximum benefit period, if enough time elapses with no further claims, your full maximum benefit period will be restored. 4. There are three other ways to reduce costs: accept a lower daily benefit, accept a shorter coverage period, or ask for a longer deductible period. 5. You can save a lot of money by shopping around. Often, you can find policies with similar benefits but greatly different pricing. Some companies may be trying to make a larger profit, while others may be out to get more business. On the other hand, some companies may assume you're a significant risk, while others do not. n Resource: You can obtain customized lists, based on individual circumstances, of long-term care policies with their benefit options, premium rates offered in your state, and the Weiss Safety Rating for each company by writing Weiss Ratings, 4176 Burns Road, Palm Beach Gardens, FL 33410, or by calling (800) 289-9222. The report costs $49. This article first appeared in Volume 4, Issue 8 of "The Social Security and Medicare Advisor" newsletter (July/August/1999). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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