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Last year, my wife and I purchased long-term care insurance policies from Massachusetts Mutual*. I am convinced that such policies are very important financial safeguards, ie. asset protection. Nationally, it is reported that 1 out of 2 people will need long-term care once in their lifetime. The average length of receiving benefits is three years as reported by several agents selling LTC insurance. As of early 2010, the average cost of assisted living in Michigan, my home state, is upwards of $36,000 annually and nursing home care is at least 50% higher. Our premiums are not even 10% of the assisted living figure. That is how LTC insurance protects your savings. In terms of affordability, it is recommended that LTC insurance premiums should not exceed 7% of your net income.
One of the basic choices you will have to make is – do I want coverage for a nursing home stay or do I want to be covered for home care. The answer is yes. Our policy covers both because who knows where you will receive medical treatment? Another key element is when will benefits begin. We looked at three different companies and they all used the same criteria: loss of two Activities of Daily Living (ADL is a standard qualifying measure of independence) or demonstrating Cognitive Impairment which means displaying the confusion and memory loss associated with Alzheimer’s Disease, among other conditions. Either of these conditions need to be certified by a licensed health care professional.
As a provider of home care technology for the past fifteen years, I have seen accelerating growth in this technology. It is becoming more affordable and more sophisticated every year. Your LTC policy needs to cover technology that is not yet available as these services may become very important to you in later years, when you start receiving benefits.
Professionally, I have been in thousands of homes. Many of my clients receive Medicaid benefits. This is what I’ve learned: when someone else is paying your long-term care bill, you receive care that fits The Program, not your wishes. And LTC insurance also has its limitations. However, my professional experience with Medicaid recipients and with privately-paying individuals create a strong desire for me to have more choices how our long-term care needs are decided. And don’t think that Medicare will provide for your long-term care needs; it doesn’t. Medicare’s services are limited to the days immediately following a three-day minimum hospital stay and may not cover beyond sixty days after discharge from a hospital or rehabilitation facility.
There are quite a few Internet resources that will help you to determine if LTC insurance is right for you, or if you can afford it. A Google search will turn up many objective resources. One that I like is on Smart Money’s site: http://www.smartmoney.com/personal-finance/insurance/the-smartmoneycom-ltc-insurance-evaluators-12864/
Another clearly written article on the subject can be found at http://assisted-living.aplaceformom.com/articles/long-term-care-costs/
It is in your best interest to apply while you are still healthy (no chronic illnesses) which is why we applied while we are in our mid-50’s. Our family histories have longevity and chronic diseases on both sides, so we felt the insurance was a safe bet.
*I am not explicitly endorsing Mass Mutual and have received no compensation from them for mentioning the company. I share their name as they offered the best overall policy and premium package among the three companies that we evaluated.
