Money Matters – Over The Hill Gang: Long Term Care Insurance
BOSTON (CBS) – If you are young and healthy the insurance industry wants to sell you long term care insurance! No one wants to insure the elderly and infirm.
Long term care insurance covers nursing home care and maybe home care for those individuals who can not perform the activities of daily living referred to as ADLs. These activities are bathing, toileting (I did not make up that term!), eating, dressing and grooming. These are the activities that allow someone to live independently. Then there is shopping, cooking, laundry, money management and using the telephone.
The younger you are when you purchase long-term care insurance the cheaper it is. Many insurance companies are targeting people in their 40s and 50s as potential customers. Most 50-year-olds don’t end up in a nursing home until they are well into their 80s though.
Recently some studies indicated that it almost didn’t matter when you purchased the insurance for the pricing came out about even. If you bought the cheaper policy at a younger age versus more costly at an older age the premiums ended up costing about the same if you used a targeted nursing home date. Why? Because you pay the cheaper premiums longer. But as you age you do take on the risk of being uninsurable.
The majority of people purchasing long term care insurance buy this product when they are in their 60s. Just about when they gain membership into the Over the Hill Gang. That seems to be the time of life when the eyes go, then the teeth, then the knees. You get the picture! It’s also when individuals begin to feel vulnerable about growing old.
So the big question is; do you need it? I don’t know! According to Genworth Financial’s 2010 long Term Care survey, the national average annual cost of a semi-private room in a nursing home is close to $68,000, with it costing over $109,000 here in Massachusetts and in Alaska that same room goes for $218,000.
If you are middle-class with some assets to protect like your home and a stock portfolio you may be a good candidate for long term care insurance. If you are poor or wealthy you probably don’t need long term care insurance. The wealthy can self-insure and the poor will be eligible for Medicaid.
If your kids are worried about you losing your home to pay for the cost of a nursing home they should buy the insurance for you.
One more thing: About 4% of our elders are in nursing homes and most of those are women over 85. Women tend to outlive men and often times take care of their husbands and then have no one to care for them.
Uncle Sam is encouraging you to purchase long term care insurance. Part of the cost of the premium will be treated as a medical expense and will be deductible if you are over age 40. The benefits will be generally excluded from gross income. The government would like to get out of the business of funding long term care through the Medicaid program.
The Office of Consumer Affairs and Business Regulation offers a Long Term Care insurance guide online that you print out.