One option for addressing the high costs of long-term care is to buy an insurance policy. Policies can cover the cost of hiring someone to help the recipient with in-home cleaning, cooking, bathing and dressing.
Coverage may also include assisted living in a facility outside the home or could include nursing home care.
The AARP offers several tips if you’re considering long-term health care insurance.
1. Buy a policy when you’re still middle-aged and before the onset of serious health problems. Waiting until you’re in your 70s or 80s or in failing health could mean insurers won’t sell you insurance or they’ll make premiums too expensive.
2. Balance your goals with the cost. Goals should include protecting your assets, minimizing your dependence on other family members, and controlling where and how you receive long-term care services. For a 65-year-old, a policy could cost between $2,000 and $3,000 a year to cover nursing home care and home care. You may choose not to buy a policy if it forces you to lower your quality of living or makes you give up things you need now.
3. Decide what coverage suits you best. Some pay only for nursing home care, others only for in-home care. Policies can be purchased to cover a mixture of options including home care (sometimes including care by a family member), assisted living or adult day care.
4. Look at the daily or monthly benefit, which shows limits to what the insurance company will pay. If the cost of your care exceeds these limits, you’ll have to pay the difference. Policies also will have a benefit period, which may be two years, six years or the rest of your life.
5. Check to see what kind of inflation protection is included in the policy. Medical care expenses climb so rapidly that a lack of inflation protection may leave you paying a large portion of care yourself.
6. Make sure that your long-term care policy doesn’t require that you spend time in a hospital to receive benefits; that it will be renewed as long as you pay premiums; and that it lets you stop paying premiums once you begin receiving benefits. Also make sure it covers pre-existing conditions if you disclosed them when you applied.
7. Consider optional products including life insurance policies or annuities with long-term care benefit riders.