If you’re planning for your retirement, or are helping a parent or grandparent make financial decisions for their senior years, you may have heard about long-term care (LTC) insurance. Not to be confused with Medicare (a public program which provides minimal long-term care assistance only in very specific and limited situations), LTC insurance is private insurance designed to cover many of the costs related to nursing facilities, home health caregivers, and other services that assist with daily living tasks.
Before you purchase long-term care coverage for yourself or a loved one, you may want to ask yourself a couple of questions. Is long-term care coverage something you need? If so, when is the right time to purchase it? Your answers to these questions will lead you to making the right decision.
Do You Need Long-Term Care Coverage?
The first question that may come to mind when considering long-term care insurance is, “Do I actually need coverage?” Unless you have very few financial assets and are eligible for Medicaid coverage, the answer is typically “Yes.”
Odds are, you or a loved one will spend at least some time in a nursing home; in fact, 70 percent of Americans over 65 will likely need some kind of long-term care, according to reports from the United States’ Department of Health and Human Services (HHS). Additionally, long-term care can be extremely expensive. HHS also reports that in 2010, a semi-private room in a nursing home cost almost $75,000 per year, more than $6,000 a month.
If you can afford the monthly premiums, long-term care may be a wise investment in your future. A long-term care insurance plan can give you peace of mind that you or your loved one will be able to receive quality, round-the-clock care if/when the need arises.
Should You Buy Coverage Now, or Wait?
The best time to purchase long-term care coverage is while you are relatively young and relatively healthy — well before you’d need to use it — when you can lock in premiums at their lowest. Obtaining coverage while you’re in your 50s will likely lead to the most economical rates. If you wait until your loved one is in his/her 60s or 70s, or you are suffering from a condition or illness at the time of your application, your premiums will be much higher — if the insurance company extends coverage to you at all.
Regardless of if you’re buying coverage for yourself or researching coverage for a parent or grandparent, be certain that you shop around. Different long-term care policies have radically different terms, benefits, waiting periods and lifetime maximums — additionally, monthly premiums can also vary widely between companies.
Long-Term Care Coverage is Worth Considering
Statistics show that the need for long-term care will be a reality for many Americans — and the cost of that care is only getting more expensive. That’s why it makes sense to research your long-term care insurance options while you’re still young and healthy, so you can have the time to thoroughly research and lock in the best rate. As you’re planning for your own senior years or those of someone you love, don’t overlook the possibility of LTC insurance — it may just be the right move for your situation.
Brandon Cruz is the President of GoHealth Insurance. GoHealth powers one of the nation’s leading private health insurance exchanges for individuals and families.