| Advice to help determine whether or not long term | | | | insurance shoots up to $7500 a year. |
| care insurance is right for you. | | | | Older people pay higher premiums because the |
| Studies by the American Association of Homes and | | | | insurance company has less time to recoup expenses |
| Services for the Aging (AAHSA), a not-for-profit | | | | associated with their policies. Conversely, a person |
| group that studies elder care, 70% of people who | | | | who pays premiums for a longer period of time gives |
| reach age 65 require long term care at some point in | | | | the insurance company more time to invest and |
| their lives. Some of this care is provided in the home, | | | | grow the funds. As a result, he or she is charged a |
| some in assisted living facilities, and some in nursing | | | | smaller premium. |
| homes. According to an October 2007 study by the | | | | Another way to lower premiums is to limit the daily |
| MetLife Mature Market Institute, the average cost of | | | | rate of the policy. The MetLife Mature Market |
| a private room in a nursing home is $77,745 a year. | | | | Institute reports that a stay in an assisted living |
| The average stay is 2.4 years. Doing the math, an | | | | facility costs $35,628 a yearless than half the |
| average stay would cost $186,588. Of course, | | | | cost of a private room in a nursing home. The insured |
| costs can go much higher than that. More than 25% | | | | could look at his or her family history and, deciding |
| of nursing home residents stay three years or more, | | | | that he or she will not be likely need the intense care |
| with 12% staying more than five years. Can you say | | | | of a nursing home, could elect coverage that pays |
| half a mill? | | | | for $97-a-day assisted living facility rather than a |
| There are three ways to pay for long term care: 1) | | | | $213-a-day nursing home. The premium would |
| out of pocket, 2) through Medicaid, the government | | | | decrease with the lower daily rate. |
| health program for low-income Americans, or 3) | | | | Another strategy to reduce the premium is to limit |
| with long term care insurance. Few people can | | | | the period the policy covers. Since the average |
| absorb $75,000 to $500,000 in expenses, so the | | | | nursing home stay is less than two-and-a-half years, |
| choice for the vast majority is between Medicaid and | | | | the insured can have the policy written to cover only |
| long term care insurance. | | | | three years. This strategy is risky, however, |
| Qualifying for Medicaid is not as easy as one might | | | | especially if the insured has a large nest egg to |
| think. The individual can have little income and very | | | | protect. There is a chance that he insured could be |
| few assets. The family home does not count as an | | | | among the one-quarter of nursing home residents |
| asset, but home equity above $750,000 does. Assets | | | | who stay longer than three years. With medical |
| transferred to a friend or family member within 60 | | | | advances, it is a virtual certainty that life expectancy |
| months of applying for Medicaid still count toward | | | | will increase in the future, increasing the chances of a |
| eligibility. | | | | prolonged stay. |
| Buying long term care requires foresight; a person | | | | A more prudent way to reduce premiums is to |
| needs to buy it before he or she needs it. The | | | | increase the waiting period, known as the elimination |
| sooner a person buys it, the lower the premiums will | | | | period, before benefits are paid. By increasing the |
| be. A 50-year old person who takes out a long term | | | | waiting period from 30 days to 90 days for a facility |
| care insurance policy that covers $150 a day in | | | | with a $150 daily rate, the insured would have to pay |
| expense for four years can expect to pay at least | | | | an extra $9000. Once the waiting period is over, |
| $1000 a year in premiums. The cost of premiums | | | | however, the insured would not have to worry about |
| more than doubles for a person fifteen years older. | | | | running up a huge bill. The long term care insurance |
| A 65-year-old will pay about $2200 a year for a | | | | would protect the bulk of the individual’s |
| similar policy. At 80, the cost of long term care | | | | assets. |