Term Care Planning"
No one wants to end up in a
nursing home or long-term care facility. Even worse, is having
the estate you worked many years to accumulate bled dry by the
cost of a nursing home or other long-term care arrangement. You
may never need long-term care. However, studies have shown that
about 19 percent of Americans over age 65 have some degree of
chronic physical impairment. Among those aged 85 or older, 55%
require long-term care. Most people are cared for at home. A
study by the U.S. Department of Health and Human Services indicates
that people over age 65 face at least a 40% lifetime risk of
entering a nursing home. About 10% will stay there five years
or longer. The population over age 85 is now the fastest-growing
segment. The odds of entering a nursing home, and staying for
longer periods, increase with age. Because women generally outlive
men by several years, they face a 50 percent greater likelihood
than men of entering a nursing home after age 65.
As you age, it is more likely you will require custodial care rather than skilled nursing. Custodial care is not covered by Medicare or health insurance. The cost of in home care is very high. The cost of assisted living depends on the level of care. Many people think they can just transfer all of their assets to their children and qualify for Medi-Cal. Without discussing the many other reasons this is not a good idea, Medi-Cal will not pay for assisted living, in home care, or custodial care. Thus, you need to plan ahead to be sure you either have long term care insurance or sufficient assets and/or income to pay for your care in the event of your disability, including Alzheimer's or senile dementia. It's impossible to predict what kind of care you might need in the future, or know exactly what the costs will be. If you do not have sufficient assets or income to cover the potential cost of long-term care, whether in a facility or at home, consider long term care insurance. Long-term care insurance covers the services that are required when a person cannot perform certain "activities of daily living" or has senile dementia or Alzheimer's disease. Today's long term care insurance policies cover skilled, intermediate and custodial care in state-licensed nursing homes, as well as home care. Many policies also cover assisted living, adult day care and other care in the community, alternate care and respite care for the caregiver.
The cost of a long-term care insurance policy is based on the type and amount of services you choose to have covered, how old you are when you buy the policy and any optional benefits you choose, such as Inflation Protection. Premiums generally remain the same each year. That means that the younger you are when you first buy a policy, the lower your annual premium will be. There are no policies that guarantee to cover all expenses fully.
Before you begin shopping, you should find out how much nursing home or home health care costs in your area today so you know what amount of coverage you should buy. Look for a policy that includes:
Insurance policies are legal contracts. Read and compare the policies you are considering before you buy one and make sure you understand all of the provisions. Reading marketing or sales literature is no substitute for reading the actual policy. Discuss the policies you are considering with your advisors. Ask for the insurance company's financial rating and an outline of coverage so you can easily compare. Good agents and good insurance companies want you to know what you are buying. Compare policies in the following areas:
There are policies that cover both husband and wife. There are also policies where you can get your money back if you do not use it, but this adds as much as 50% to the premium.
If you are self-employed, the
premiums may be tax deductible!
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