Where
can I get long-term care coverage?
Although long-term care insurance
is relatively new, more than 100 companies now offer coverage.
Long-term care insurance is generally available through groups and to
individuals. Group insurance is typically offered through employers,
and this type of coverage is becoming a more common benefit. By the
end of 2002, more than 5,600 employers were offering a long-term care
insurance plan to their employees, retirees, or both.
Individual long-term care insurance coverage is a good option if you
are not employed, work for a small company that doesn’t offer a plan,
or are self-employed. |
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What are the types
of long-term care policies?
Several types of policies are
available. Most are known as "indemnity" or "expense incurred"
policies. An indemnity or "per diem" policy pays up to a fixed benefit
amount regardless of what you spend. With an expense-incurred policy,
you choose the benefit amount when you buy the policy and you are
reimbursed for actual expenses for services received up to a fixed
dollar amount per day, week, or month.
Today, many companies also offer "integrated policies" or policies
with "pooled benefits." This type of policy provides a total dollar
amount that may be used for different types of long-term care
services. There is usually a daily, weekly, or monthly dollar limit
for your covered long-term care expenses.
For example, say you purchase a policy with a maximum benefit amount
of $150,000 of pooled benefits. Under this policy you would have a
daily benefit of $150 that would last for 1,000 days if you spend the
maximum daily amount on care. If, however, your care costs less, you
would receive benefits for more than 1,000 days.
There are no policies that guarantee to cover all expenses fully.
You usually have a choice of daily benefit amounts ranging from $50 to
more than $300 per day for nursing home coverage. The daily benefit
for at-home care may be less than the benefit for nursing home care.
It’s important to keep in mind that you are responsible for your
actual nursing home or home care costs that exceed the daily benefit
amount you purchased.
Because the per-day benefit you buy today may not be enough to cover
higher costs years from now, most policies offer inflation
adjustments. In many policies, for example, the initial benefit amount
will increase automatically each year at a specified rate (such as 5
percent) compounded over the life of the policy.
Some life
insurance policies offer long-term care benefits.
With these accelerated or living
benefits provisions, under certain circumstances a portion of the life
insurance benefit is paid to the policyholder for long-term care
services instead of to the beneficiary at the policyholder’s death.
Some companies make these benefits available to all
policyholders; others offer them only to people buying new policies.
What do long-term policies cost?
The cost of long-term care
insurance varies widely, depending on the options you choose. For
example, inflation adjustments can add between 40 and more than 100
percent to your premium. However, this option can keep benefits in
line with the current cost of care.
The actual premium you will pay depends on many factors, including
your age, the level of benefits, and the length of time you are
willing to wait until benefits begin. A licensed long-term care
insurance agent or a financial advisor can help in balancing
policy features and premium cost. |