Covering the rising cost of long term care has been a subject of much debate and discussion for a number of years now. And if the past is any indication the subject should stay in the limelight for years to come.
Nursing home costs on our area average $150.00 per day for custodial care and the average stay averages a little over a year… 388 days to be exact. Using those figures the cost comes up to $58,200.00.
This is a cost that not very many people can afford to bear themselves.
There are a number of ways for long term care, whether in home or in the nursing home, to be financed.
1. Self Pay, this one is fairly obvious. You pay the bill with personal savings and assets. The problems with this option are also obvious. A lot of people do not have that kind of money lying around and if they do, they probably have planned on using it for something else besides paying for nursing home costs.
2. Medicaid. This option is for the segment of society who have few enough assets and income to qualify for help from the state to pay for nursing home. This option is becoming increasingly difficult to qualify for. With state budget stretched to the limit, most states have tightened the requirements for individuals to qualify for this type of assistance.
3. Life insurance and annuities. Recent innovations in the insurance industry have brought these financial vehicles into the long term care arena. One option is the purchase a life insurance policy that includes a benefit that allows the insured to use part of the death benefit amount to pay for long term care, under certain requirements and limits.
With the annuity, withdrawals are allowed, with no surrender or early withdrawals penalties to help pay for long term care expenses. This option is fairly new and is an evolving product in the insurance marketplace. If you want to investigate this option, you need to do your due diligence, check it out thoroughly and above all, talk to an expert advisor that you trust.
4. Long term care insurance. (LTCI). This product has evolved and matured over the years. The number of insurance companies offering these policies has significantly reduced over the years. One would assume that the companies that are left in the market are committed to the market and maybe have figured it out when it comes to pricing and underwriting these policies.
These types of policies have a daily benefit amount expressed in dollar amount that will be paid upon activation of coverage. Other things that affect the premium are the waiting period which the amount of time that must go by after the admission to a care facility before the daily benefit amount starts and the benefit period which is the amount of time that the benefits will be paid.
Deciding how you are going to pay for long term care is a decision that needs to be made well in advance of the need for the care.
Like any other financial decision, this one should be made after considering all the relevant facts with input from a trust source that specializes in these types of decisions.