IN YOUR PRIME: What are the basics of long-term care insurance

Most people over age 65 will likely need long-term care insurance, experts say. Photo/Provided

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Most people over age 65 will likely need long-term care insurance, experts say. Photo/Provided

Many older adults get some peace of mind by taking steps to finance long-term care should they become incapable of living independently.

LT Care Consumer, a health care advisory company, says 70 percent of people over age 65 will require some type of care at some point in their lives. According to the 2017 Cost of Care study by Genworth Financial, the average annual cost for a private room at a nursing home is $97,455. Such costs illustrate why long-term care insurance can be a wise investment.

Long-term care, or LTC, encompasses services and support that assist individuals with the activities of daily living. ADLs include bathing, eating, dressing, toileting, and more. In addition, LTC may support needs such as caring for pets, household chores, medicine management, and meal preparation. LTC may be provided by specialized assisted living facilities or by in-home care workers.

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The resource Long Term Care Primer advises that individuals typically must fund their own long-term care. Many facilities are not subsidized by government assistance programs under Medicare in the United States. Medicaid may step in for certain individuals who are of limited means, but that assistance may be exclusive to those living in skilled nursing facilities. That means the bulk of paying for long-term care rests on the individual.

Long-term care insurance can pay for care to treat chronic health conditions and meet personal needs over an extended period of time. This is known as custodial care. Individuals who have habits or health issues that could result in the need for LTC in the future should look into LTC insurance. LTC insurance also can be a sound investment for individuals who cannot afford extended nursing care out-of-pocket.

The Ohio Department of Insurance notes that policies may vary, but they typically include a deductible or elimination period, which is a time when the policy holder is liable for payment before the insurance begins. Policies typically include a daily benefit as well. This is the maximum amount the insurance company will pay toward each day in the nursing facility; the policy holder may be responsible for the difference. Policies also include a benefit period, or the length of time the policy will pay the daily benefit, which can be a few years or a lifetime.

Individuals also have other options in regard to securing long-term care. Care.com says comprehensive LTC policies, combination policies and riders to current life insurance policies may help augment long-term care needs. Because LTC insurance - and paying for health care in general - can be quite confusing, people are urged to speak to professionals about their options and whether LTC insurance is necessary. A 2014 study by the Center for Retirement Research at Boston College estimated that only 20 to 30 percent of people would benefit from a policy. Researchers concluded that, while many people do need long-term care, they may not need it for an extended period of time and may be able to cover their care with their own savings. Furthermore, cost for policies may be $2,000 a year - which is a concern for some people.

Individuals who purchase LTC insurance should know that medical underwriting for policies can be extensive. Coverage may be denied for current or past health conditions. Most people find that the best age at which to buy LTC insurance is in one’s mid-50s. Healthy individuals may be eligible for discounts on LTC premiums.

Long-term care insurance is a consideration for older adults facing the potential for care assistance in the future. Because considerable cost is involved, potential policy holders should discuss their options with insurance and financial professionals.

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