Although most of us don’t think we will ever end up in a nursing home, the fact is that 40 percent of the elderly will stay in a nursing home at least once, and at least 10% will stay for at least five years, according to the Agency for Health Care Policy and Research. Long-term care can be extremely pricey, with an average Skilled Nurse Facility costing at least $40,000, so it’s wise to have a plan to handle these expenses.
Long-term care can take place anywhere: at home, in a nursing home, or in an independent living community with assisted living. You may need to move from your own home, or an independent living community into a nursing home, to ensure that you have the right amount or type of care you need.
Make sure that the policy you select states whether it pays full benefits for your facility and that the details of what it covers are clearly outlined. It is very important to read the policy thoroughly and carefully, particularly the fine print, before signing anything at all.
Additional points to keep in mind:
- Policies cost less when you are younger and in good health. The longer you wait, the more expensive they get. As with most insurance, the best time to get it is before you need it.
- Insurers can turn down policies for pre-existing conditions.
- If you do buy the policy early, you will not know what type of coverage you will need, so make sure there is a lot of flexibility in the policy.
- Read and understand the claim process, and file claims promptly.
- The benefits paid out through a long-term care policy are generally not taxed as income.1 Tax advantages vary by state; research the deductions and credits for your state.
- Long-term care costs continue to rise. Make sure that your benefits keep up with inflation, by looking into inflation protection (or insurance for your insurance).
- Research the financial rating of long-term care insurance companies – check with Moody’s, Standard and Poor’s, and A.M.Best.
- Contact your state insurance department for a list of companies that provide long-term care, and check to see if there are any complaints have filed against them. Look at price quotes for at least three companies before choosing one.
- Most states allow a 30-day review period after signing a contract. This gives you time to read the contract carefully and review with a financial adviser, attorney or a trusted friend or family member. If you change your mind during this period, you can get a full refund.
1, “Understanding Long-term Care Insurance – Aarp.org”. N.p., n.d. Web. 16 Nov. 2017 <https://www.aarp.org/health/health-insurance/info-06-2012/understanding-long-ter>.