Here’s what you need to know about long-term care insurance — the kind that covers in-home care, assisted-living apartments and nursing homes.
If you’re of modest means — a few thousand in the bank, a little home equity — don’t get it. You probably can’t afford it, and Medicaid will pick up the bill after you spend the little savings you have.
If you’re fairly rich — think $2 million or so — you don’t need it, say financial planners. Chances are you can pay for help without impoverishing yourself or your spouse.
If you’re in the middle, long-term care coverage is something to consider, financial planners and elder-care lawyers say, especially if you have a spouse or want to leave an inheritance for the kids. But it can cost thousands of dollars a year.
Seven in 10 of us will eventually need some help getting along, according to the U.S. government.
Families provide a lot of that for free. The real problem hits when the old person needs more than family can give. At-home help can strain a middle-class budget, and a nursing home can break it.
Uncle Sam is stingy with long-term care. Medicare, the medical program for old people, doesn’t cover most long-term care in nursing homes. It doesn’t cover the unskilled help the infirm need to stay in their homes — such as cooking, cleaning, dressing or bathing. It doesn’t pay costs at assisted living centers.
If you get coverage, there’s a good chance you’ll use it. The Department of Health and Human Services says about 70 percent people need help with daily living when they’re old.
According to the government, 13 percent of us will land in “assisted living” apartments, where help comes with the rent.
One-third of us will spend time in nursing homes, but most won’t stay long. A 2007 study in California found that 76 percent of nursing home residents stay less than three months. (Remember that policies exclude the first 90 days.) Only one in 10 nursing-home patients stays more than a year.
Half the claims under long-term care policies are for in-home care, which keeps people out of nursing homes.
“It’s actually nursing home avoidance insurance,” says Jesse Slome, director of the American Association for Long-Term Care Insurance.
About 18 percent of claims are for assisted-living facilities. About 31 percent of claims are for nursing homes.
Should you get such coverage? “That’s a tough one,” says Michele Clark of Clark Hourly Financial Planning in Chesterfield.
Some thinks people worth $2 million can skip such coverage, but Clark thinks it’s more complicated.
“If you have $3 million in the bank and you’re spending $150,000 a year, traveling the world, then you’ve already spent your $3 million,” she says. So, you have to measure your savings against your lifestyle.
Also, coverage isn’t endless. Insurance policies have limits in dollars or years. Some people buy only part of the coverage they may need, planning to fill in the rest with savings.
For more information on assisted living and it’s costs and benefits, contact Spring Arbor.
St. Louis Post Dispatch