Long-Term Care Insurance: What You Should Know

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Long-term Care Insurance | Elder Law Attorney | Dayton, OH | Lovett & Lovett Co., LPAIf you have a 401(k) or other retirement savings plan, you may think that you don’t need long-term care insurance. After all, won’t your 401(k) or retirement savings plan take care of any nursing home or assisted living facility expenses? The answer is, well, maybe. However, long-term care insurance, much like home or auto insurance, is a safety net. It’s there to protect you from the unexpected. Here are some things you should know about long-term care insurance:

If you don’t have long-term care insurance, you have two options to fund your nursing home or assisted living facility stay: personal assets or, if you can qualify, Medicaid. Keep in mind (no disrespect to Medicaid) that Medicaid won’t exactly leave you in the lap of luxury.

When shopping for a long-term care policy, pay close attention to the elimination period. The elimination period is a time span during which you cover your long-term care expenses, and after it has expired, your insurance policy kicks in. According to U.S. News & World Report, “Most LTC [long-term care] polices are sold with 90-day elimination periods, meaning you pay your own expenses for the first 90 days and then the policy kicks in.”

Before purchasing any insurance policy, you’ll want to get intimate knowledge of what qualifies you to file a claim. For instance, most often with long-term care policies, an individual must be unable to perform two to three of the six ADLs (activities of daily living), which are eating, bathing, dressing, toilet-ing, transferring (walking), and continence. This means, in order to collect on your long-term care policy, you must be unable to do two or three of the activities mentioned above.

Compare the details of multiple policies before making a decision. In addition to elimination periods, long-term care plans include daily benefit limits and maximum benefit periods. Compare different plans to find the one that might be right for you. Keep in mind that the biggest plan isn’t always the best plan.

Research combined with knowledge of your personal and family history can help you understand if you even need long-term care insurance and, if so, how much coverage you might need. The Department of Health and Human Services reports that at least 70 percent of people over the age of 65 will eventually need long-term care. Since women tend to live longer, there’s a fairly good chance that a woman will need a longer maximum benefit period than a man. Shop around to find out how much a semi-private and private room might run you at a nursing home in your area. Once you have some numbers, calculate the rate of inflation (approximately 5 percent a year) to get a better idea of how much coverage you might need.

If you decide you need long-term care insurance, only buy what you can afford. Suze Orman says, “Do not stretch to buy a policy that covers 100 percent of anticipated future costs. It is far smarter to buy the amount of coverage for which you are sure you can keep making the premium payments. It makes no sense to buy a policy today that you will have to abandon in a few years because it is too expensive.”

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About George Lovett

George H. Lovett is a founding partner of Lovett & Lovett. Mr. Lovett brings years of experience and insight to each case that he handles. A certified expert by the Ohio State Bar Association in Estate Planning, Trust and Probate Law, Mr. Lovett uses his extensive knowledge to compassionately and effectively help clients and their families work through legal matters in the areas of Wills and Trusts, Probate, Guardianship, and Medicaid and Nursing Home Planning.George Lovett's Google+ Profile

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