Jun. 15, 2012 06:09 PM
Special for The ABG
Question: What are your thoughts regarding long-term-care insurance?
Answer: Insurance agents who are eager to earn a hefty commission often will tell you that long-term-care insurance is the solution to your concerns about an extended stay in a nursing home. Don't get your hopes up. Policies are complicated and filled with all sorts of exclusions and limitations. On top of all that, they're expensive, too.
The decision to purchase LTC insurance is a trade off. Do you want to pay thousands of dollars annually, beginning at age 60, to guard against the possibility of a long-term stay in a nursing home? If you live into or past your mid-80s, you can end up paying $100,000 or more on an LTC policy (not to mention the lost investment earnings on these insurance premiums).
People who end up in a nursing home for years on end may come out ahead financially when buying LTC insurance. The majority of people who stay in a nursing home are there for less than a year, though, because they either pass away or move out.
Medicare pays for the bulk of the cost of the first 100 days in a nursing home as long as certain conditions are satisfied. Medicare pays for all basic services (telephone, television and private-room charges excluded) for the first 20 days and then requires a copayment of $144.50 per day for the next 80 days.
The nursing-home stay must follow hospitalization within 30 days, and the nursing-home stay must be for the same medical condition that caused the hospitalization. When you're discharged from the nursing home, you can qualify for an additional 100-day benefit period as long as you haven't been hospitalized or in a nursing home in the 60 days before your readmission.
If you have relatives or a spouse who likely will care for you in the event of a major illness, you definitely should not waste your money on nursing-home insurance. You also can bypass this coverage if you have and don't mind using retirement assets to help pay nursing-home costs.
Even if you do deplete your assets, remember that you have a backup: Medicaid (state-provided medical insurance) can pick up the cost if you can't. However, be aware of a number of potential drawbacks to getting coverage for nursing-home stays under Medicaid:
Medicaid patients are at the bottom of the list. Most nursing homes are interested in the bottom line, so the patients who bring in the least revenue -- namely, Medicaid patients -- get the lowest priority on nursing-home waiting lists.
Some nursing homes don't take Medicaid patients. Check with your preferred nursing homes in your area to see whether they accept Medicaid.
The states may squeeze Medicaid further. Deciding which medical conditions warrant coverage is up to your state. With the budget noose tightening, some states are disallowing certain types of coverage (for example, mental problems for elderly people who are otherwise in good physical health).
Consider buying nursing-home insurance if you want to retain and protect your assets and it gives you peace of mind to know that a long-term nursing-home stay is covered. But do your homework. Do some comparison shopping, and make sure that you buy a policy that pays benefits for the long term.
Watch out for policies that restrict benefits to limited types of facilities and settings.
You also may want to consider retirement communities if you're willing to live as a younger retiree in such a setting. After paying an entrance fee, you pay a monthly fee, which usually covers your rent, care and meals. Make sure that any such facility you're considering guarantees care for life.
Eric Tyson is the author of "Investing for Dummies."
No comments:
Post a Comment