Long term care insurance is designed to cover the gaps that exist in Medicare coverage and also private health coverage. And because a majority of Americans are living longer lives, there is a growing need for specialized coverage that will pay for assisted-living, in-home care, or nursing home expenses. Read on and learn how these policies work and whether or not you truly need to pay for the expense.
The Average Cost of Care - The cost for care in a skilled nursing home is probably much higher than you would expect. Unless you have arranged nursing home care for a loved one, you typically will not think about these costs until you do not qualify for long term care coverage. According to the Federal Health Care Financing Administration, skilled nursing home care will cost about $200 a day on average. Some facilities may charge less and many charge more in areas with a higher cost of living. Considering the average of $200 a day, the cost for housing and care will add up to about $73,000 per year.
How Can You Pay for These Costs? - If you do not have long term care insurance, the only way to pay for these costs is to use your savings or the income you receive from Social Security. Because Social Security income will not cover the total costs, you may have to rely on a family member to help pay the costs. No one wants to see all of the savings they have accrued be used to pay for care when they age. By paying premiums towards a long term care policy, you will receive a specified daily benefit to cover the costs of care so that you can hold onto your savings and keep your nest egg intact.
What You Should Know When you Apply - Putting off the purchase of long term care insurance will cost you more money over time. The younger you are when you apply, the less you will pay each year. Most people apply around age 55. The average cost for a $100 benefit per day is around $723 per year. If the same applicant chooses $150 per day, they can expect to pay around $1550 per year. Applicants who wait to apply until age 65 pay much higher premiums. The average premiums range between $1365 and $4867 per year depending on the daily benefit chosen.
Long term care insurance covers both in-home care and care in a nursing home or an assisted living facility. Unless you are wealthy and choose to self-insure, you need long term care insurance. Plan to live a long life without using your nest egg for living costs and apply for coverage while you are young. After all, coverage can also be used if you are young and suffer a long term disability.
Gil Martin is an insurance executive who earned his Master's Degree in Actuarial Science in 1994. More of his expert advice can be found at Best Online Actuarial Science Degree Programs.