Planning for long-term care may not be pleasant, but it is important.
Long-term care insurance pays for nursing, rehabilitative and other related health services. The cost of this care is very expensive. Those without insurance can quickly deplete their retirement savings, causing them to have to sell their home or other assets to pay for care. People who have saved their entire lives to live comfortably in retirement and to leave an estate to their children should consider purchasing long-term care insurance to protect these assets. However, deciding how much long-term care insurance coverage is enough can be difficult.
Long-Term Care Need
While most people will need long-term care at some point in their lives, some people may not require a stay in the nursing home to receive the care. Those with close families that can provide assistance may have a reduced need for long-term care insurance as they can receive care from their spouse, children or other relatives. While families may not be able to care for all a person's needs, family care can replace many of the services of long-term care providers. Those without significant assets to lose may also consider not buying long-term care insurance and simply rely on the benefits provided by Medicaid.
Affording the Insurance
Another concern is whether the person can even afford long-term care insurance, regardless of other factors. People who cannot afford care and who cannot depend on others to receive care, yet have assets to protect, should meet with an estate planner to determine what course to take.
How Much
Many long-term care insurance policies set a maximum daily payment. For example, the policy may provide $250 per day of coverage. Those interested in buying long-term care insurance should determine the current cost of nursing home care in their area or likely area of retirement as a place to begin. Numerous websites provide this information for different areas. Those with financial assets they can use to help cover the costs of care may choose to buy less than the daily average for their area and plan to pay the difference out of pocket.
Other Consideration
The threat of inflation can have a large impact on the value of long-term care policy purchased at today's care rates. Some policies have inflation protection built into the accounts. Though inflation protection is expensive, it is likely to be a wise decision. Married couples might want to consider a joint long-term care insurance plan. These plans allow two people to share the benefits of the plan. For example, if the policy covers three years of services, the couple will then share this amount of time.
