Information On Long Term Care Insurance

Long-term care insurance: who needs it, when and why. Learn how it can forestall financial disaster, and what to seek in coverage.

Long term care insurance is a hot topic today, and it needs to be a thoughtful concern of those who are considering its purchase. The cost of any type of extended care rises every year and we know only too well that it will continue to do so.

Some people do not need to think about insuring themselves against a prolonged need for daily assistance. The very wealthy, who in 2001 can afford to pay $30,000-80,000 per year for care, should read no farther. At the other end of the spectrum, those with few assets and limited incomes will qualify for Medicaid very quickly and don't require insurance either. Singles don't have the need to protect their assets for a spouse and may opt to take their chances without insurance.

But for those people in the middle, with nominal assets, the shadow of long-term care darkens the horizon. To illustrate the point, Bob and Mary were both in their 80's and their combined estate was in excess of a million dollars. Much of the estate was not liquid""a lot was real estate, and not the kind that is easily marketed.

Bob, who was the younger of the two, suffered a stroke that left him unable to care for himself. Mary, a slight little lady, couldn't care for him at home. The answer was a nursing home and the cost was in excess of $3,000 per month. (These are central Virginia amounts""that figure could be more than double in high cost areas.) Additionally, the monthly charge for the home care doesn't include prescriptions, supplies or any medical procedures not performed in the nursing home.

Because of the value of their assets, Bob and Mary could not qualify for Medicaid. The monthly income for the two was low""social security and a small pension. Mary sold the farm equipment, one rental house and some land. However, the house was mortgaged and the equipment went at fire sale prices. The rental properties operated at negative cash flow, and Mary had those expenses in addition to Bob's care.

Fortunately, there was timber that sold and brought in needed cash""it provided money for the nursing home for less than three years. That was a true case of money growing on trees, but most of us don't have that kind of a resource. Bob died last spring although his day-to-day health was such he could have lived much longer. Mary commented, "Bob and his money ran out at the same time."



At a time when Mary needed all her inner resources to cope with the illness of her spouse, she was called upon to juggle finances to simply stay afloat. Hearing the story should cause many to perform in-depth analyses of their financial situations. Not everyone has a million-dollar estate but they do have could easily be shrunk to nothing if long-term care is required for any extended period.

Another common factor in today's society is for a couple to have children by prior marriages. This can further complicate the situation, especially if the estate value is skewed to one of the partners. The next generation may resent the assets of one being depleted to care for the other.

In spite of legislation that attempted to prohibit the advice, many professionals still advise clients to "spend down" their assets so that Medicaid will be available should long-term care be required. This is generally accomplished by gifting and can trigger gift taxes if the assets are considerable. In addition, if gifting within the family you can have the age-old problem of siblings who are resentful or who spend the gifts immediately even though it might have been the donor's intention that the money be set aside for later care.

For those who opt for insurance, it's expensive. Even in areas where the rates for healthcare are relatively low, the policies required to cover the expenses have high premiums. In high-cost areas, more coverage and higher expenses would be necessary. On the other hand, the insurance does more than guarantee care""it can give peace of mind and the knowledge that assets may be used for our enjoyment now, not hoarded against the day the dark clouds produce rain.

Whatever the individual circumstances, anyone who's considering long-term care insurance should shop around; become familiar with the coverage offered by various policies and know what current nursing home or in-home care costs in your community. Coverage for in-home care should be included as the trend for leaving the elderly in their homes as long as possible is on the rise. There are various features in all the policies that protect the insured against inflation and those should also be thoroughly understood.

Shop till you drop is highly recommended here. This is insurance against a catastrophe, not for one. Hopefully, you'll never need it, but if you are among those that need it for peace of mind and asset protection, shop now..

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