Retirement News : Seniors : Ins, outs of Long-Term Care Insurance

Ins, outs of Long-Term Care Insurance

Date Added: 23-06-2005

How would you pay for a two-year stay in a nursing home? If you or your family have not yet experienced the financial pitfalls of a long-term care situation, consider this:
 
    
More than half of women and nearly one-third of men 65 and older will stay in a nursing home during their lifetime.
 
    
The average stay is 2.4 years.
 
    
The current cost in Massachusetts is approximately $100,000 a year.
 
     In the face of this data, many believe that Medicare, private Medigap insurance, or other retiree health care plans will cover these costs. With minor exceptions, this is not the case. So a growing number of people in their 50s and 60s are purchasing private Long-Term Care Insurance ("LTCI") to cover extended periods of illness in nursing homes, assisted living facilities, or at home.
 
     Depending on one's age and other factors, a typical LTCI policy covers 3-6 years of care and costs a 55-year-old in the area of $1,500-2,000 a year.
 
     This type of insurance is not for everyone. For example, premiums skyrocket if you purchase the policy after age 65. But when purchased at a younger age in order to lock in lower premiums, such coverage can help cushion some of the expenses. In addition, a portion of the premiums may be deductible as a medical expense on your tax return.
 
    
Potential costs

 
     According to MetLife's 2004 Survey of Nursing Home and Home Care Costs, a private room in a Boston-area nursing home averages $103,000 a year, among the highest in the country. A semi-private room is up to $97,000 per year. It is easy to see how quickly one's life savings could be exhausted in this circumstance, leaving little or nothing to one's heirs.
 
    
Alternatives for paying

 
     The choices most families face in paying for these expenses usually include these options:
 
    
Cover the nursing home costs yourself-self-insure, in other words.
 
    
Spend down your assets until you qualify for Medicaid, which will then pay the nursing home bills. The current asset maximum for Medicaid eligibility is $2,000 for people over 65. If you need to go this route, consult a qualified elder-law attorney. 

For More Information: http://www2.townonline.com/arlington/opinion/view.bg?articleid=273027