Long-Term Care CostsHowMuch?
Results from the2021 surveyshowed the annual median costs for various services.
What Is Long-Term Care Insurance?
Long-term care is just one thingMedicare doesn’t cover. You’ll likely have to pay for dental, hearing and routine vision care, too.
Long-term care insurance covers expenses regular health insurance andMedicaredo not.
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A doctor usually needs to show that a patient needs long-term care before a policys benefits kick in.
Each policy comes with limitations, though.
Its not a blank check for all your future long-term care needs.
Policies usually cap the amount paid out per day and the amount paid during your lifetime.
They also include an elimination period before benefits begin.
Hybrid Policies
Hybrid policies link alife insurance policywith a long-term care policy.
These policies are now much more common than traditional stand-alone LTC policies.
Your family still receives some money after you die, by way of a life insurance payout.
Over the last decade, fewer people dropped policies and insurance companies paid out more claims than they expected.
Insurers also overestimated how much they would earn in investments.
Insurers are also much more selective about who they approve for traditional policies.
Theyre very controlled and careful, Wilson explained.
The underwriting process is very strict.
Its harder to get a policy if you take certain medications or have certain health issues.
This has given rise to hybrid policies.
They require more of an upfront sum, unlike the pay-as-you-go premiums traditional long-term care policies feature.
But theyre less risky and more readily available for those who can afford them.
How Much Does Long-Term Care Insurance Cost?
There is no way around it.
Long-term care insurance is expensive.
The cost of long-term care insurance depends on several factors.
But if you want policy benefits to increase 1% per year, annual premiums jump to $1,375.
Females pay higher premiums for long-term care insurance.
A policy with benefits that increase 1% per year costs $2,150 on average.
Hybrid Policy Cost
Hybrid policies generally require a larger upfront payment.
If youre young enough, you might spread that initial payment over a few years.
It does not pay for long-term care.
These plans often involve a way to keep some assets and still qualify for Medicaid.
Call your states insurance department to find out if your state has a partnership plan.
Should I Buy Long-Term Care Insurance?
Thinking through how you will pay for long-term care is an important part of any financial plan.
Dont wait until you need care to figure it all out.
You really need to start looking at it in your 40s or 50s; otherwise it gets very expensive.
Long-term care insurance can protect your savings and give you more choices for care.
If you have no assets, Medicaid might provide you the care you need.
Buying it earlier will mean lower premiums and an increased chance of acceptance.
From ages 45 to 55 is the sweet spot, Wilson said.
Expect a medical questionnaire, exam or blood test.
Most long-term care insurance companies will exclude people with preexisting conditions or a family history of certain medical issues.
When shopping for plans, see to it you know:
Long-term health insurance is customizable.
Changing the coverage amount and elimination period will influence the policy premium.
Alternatives to Long-Term Care Insurance
Long-term care insurance isnt the only way to pay for care.
There are other options, each with its own limitations.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
She focuses on retirement, Medicare, investing and taxes.
Tiffani Sherman, a Florida-based freelance reporter, contributed to this story.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
