Sunday, November 05, 2006

Long Term Care Insurance- A Worthwhile Investment?

Long-term care insurance is generally not in the forefront of people’s thoughts when they think about protecting themselves and their families financially.

Many people do not take the time to learn about their insurance policies and Medicare coverage. I believe that the reason people do not do this is because it is extremely complex to understand and make sense of. Because of this complexity many people just assume that Medicare will cover whatever needs they may have once they retire and reach age 65. The general public leaves it up to their doctors or healthcare providers to “figure out all the insurance stuff”. This is not in your best interest though.

Consider this, most people will turn their automobile off when pumping gasoline because there is a very small statistical chance of the vehicle catching on fire. Now ask yourself how many of these people have long term care insurance. The answer is that very few of them do, even though the statistical odds of being placed in a long term care facility are almost 90% for most people in the USA.

Many of you reading this will spend at least one week in a nursing home or long term care facility towards the end of your life, yet you do not have insurance to pay for this. Think of friends and relatives who have died, did they spend some time in a long-term care facility before they died? Now ask yourself if Medicare will pay for this? Do you know the answer? What if a retiree who relies completely on Medicare for health coverage and has no income is placed in a nursing home? Are they eligible for both Medicare and Medicaid?

The trap that many fall into is that they get stuck in what is referred to as a “spend down” situation. This means that the person in the facility must spend all of their assets before they are eligible for Medicaid assistance. If this person planned on leaving their home to their children or grandchildren they cannot because it must be sold to help pay the costs of the nursing home. Any savings accounts must be spent too. Basically any assets that the patient has must be used up before Medicaid will step in to assist in payment with Medicare.

Now if you have long term care insurance you can help protect those assets. Long-term care insurance, while expensive, is still cheaper than having to sell everything you own if you find yourself in a long-term care facility. Long-term care insurance provides you with control over your assets and allows you to not have to rely on Medicaid to supplement your Medicare benefits.

With the advances in medical technology people are able to “live”, or at least stay alive for longer periods of time than in the past. As the years go by this will only increase. If you look at medical problems that would have resulted in death five or ten years ago you will see that people suffering those same conditions are able to stay alive for years in a nursing home today. Nursing home care is extremely expensive, especially the ones that provide quality care. You can find long-term care facilities charging as much as $3,000 (or more) a month for providing care. That figure assumes that you have no major health problems and does not account for medications.

We all like to think that we have years before we have to worry about purchasing long term care insurance but the reality is that we never know when we may find ourselves in a long term care facility. Also, if you look into long term care insurance at a younger age it is less expensive than if you wait until age 65 or 70. Plan now so that your family does not have to “spend down” your assets that you want to leave to them. Most insurance companies offer long-term care insurance. Find a plan that fits your needs the best and get insured today, because statistics tell us that we will most likely spend some time in a long term care facility towards the end of our life.

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