Long Term Care Insurance
Long-term care is not covered by Medicare , but may be covered by Medicaid if eligible. Policies often include “pooled benefits”, which means that you are provided with a total dollar amount that may be used for different types of services.
What it covers:
Care in nursing homes and home care services such as nursing care, physical therapy, and home health aides
Assisted living, adult daycare, and alternate care
Alzheimer’s and other organic cognitive disabilities usually covered
What it does not cover:
Preexisting conditions (insurance companies may exclude coverage of preexisting conditions for six months)
Some mental and nervous disorders, alcoholism, and drug abuse
Usually, there is a daily, weekly, or monthly limit to your covered expenses. Daily benefit amounts generally range from $50 to more than $300 per day for nursing home coverage. You will have to pay for any costs exceeding the daily benefit amount that you purchase.
Factors that affect cost of policies:
Inflation adjustment- initial benefit amount will increase automatically each year at a specified rate; can add 40 percent to over 100 percent to the premium
Age- the older you are, the more expensive the premium; however, premiums remain the same each year so the younger you are when you buy the policy, the lower your annual premium will be
Benefits- size of daily benefit and length of time for which medical insurance benefits will be paid
For example, In 1999, a standard long-term care policy including $100 per day benefit for 4 years would cost $409 for a 50 year-old, $1,002 for a 65 year-old, and $4,166 for a 79 year old. When adjusted for inflation, this same policy would be $881 for a 50 year-old, $1,802 for a 65 year-old, and $5,895 for a 79 year old.