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Medicare does not cover custodial care confinements and 98% of the cost is paid for by individuals like you.
The plain fact is only the very poor or the very rich can afford to be without nursing home insurance. This is because the average cost of a nursing home stay can run as high as $60,000 each year! While the very poor have Medicaid, where one must give up their life long possessions to obtain it, and the very rich are able to sustain those kinds of costs, the vast majority of middle class Americans are left without protection of any kind.
Think of it this way. When you are making a living and supporting your family, you have life insurance to help replace your income and continue its benefits to your family if something happens to you. When you buy Long Term Care (Nursing Home) Insurance, you are “insuring your savings” so that if you go to the nursing home, the insurance will offset its costs and your savings will remain intact for the benefit of your spouse and children. In other words, by investing a portion of the interest of those same savings in nursing home protection, you can take steps to preserve your capital for the future safety and well being of your heirs.
While the average cost of a year in the nursing home can easily exceed $40,000, it is easy to see how a prolonged stay of one or more years could represent a catastrophic loss to your lifelong savings. Because Medicare does nothing to protect you from the cost of custodial care confinements, you should be thinking about obtaining long term care nursing home insurance if your assets, exclusive of your homestead, are $20,000 or more. The greater your assets, the greater your need for this insurance becomes.
The National Association of Insurance Commissioners has developed standards that protect consumers. Look for a policy including:
- At least one year of nursing home or home health care coverage, including intermediate and custodial care. Nursing home or home health care benefits should not be limited primarily to skilled care.
- Coverage for Alzheimer's disease, should the policy holder develop it after purchasing the policy.
- An inflation protection option. The policy should offer a choice among: automatically increasing the initial benefit level on an annual basis, a guaranteed right to increase benefit levels periodically without providing evidence of insurability, or covering a specific percentage of actual or reasonable charges.
- An "outline of coverage" that systematically describes the policy's benefits, limitations and exclusions, and also allows you to compare it with others. A long term care insurance shopper's guide that helps you decide whether long term care insurance is appropriate for you.
- A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or suffer deterioration in physical or mental health.
- The right to return the policy within 30 days after you have purchased the policy (if for any reason you do not want it) and to receive a premium refund.
- No requirement that policyholders: first be hospitalized in order to receive nursing home benefits or home health care benefits, first receive skilled nursing home care before receiving intermediate or custodial nursing home care, first receive nursing home care before receiving benefits for home health care.
The following checklist will help you compare policies you may be considering:
1. What services are covered?
- Nursing home care
- Home health care
- Assisted living facility
- Adult daycare
- Alternate care
- Respite care
- Other
2. How much does the policy pay per day for nursing home care? For home health care? For an assisted living facility? For adult daycare? For alternate care? For respite care? Other?
3. How long will benefits last in a nursing home? At Home? In an assisted living facility? Other?
4. Does the policy have a maximum lifetime benefit? If so, what is it for nursing home care? For home health care? For an assisted living facility? Other?
5. Does the policy have a maximum length of coverage for each period of confinement? If so, what is it for nursing home care? For home health care? For an assisted living facility?
6. How long must the wait be before preexisting conditions are covered?
7. How many days must the wait be before benefits begin for nursing home care? For home health care? For an assisted living facility? Other?
8. Are Alzheimer's disease and other organic mental and nervous disorders covered?
9. Does this policy require: An assessment of activities of daily living? An assessment of cognitive impairment? Physician certification of need? A prior hospital stay for nursing home care? Home health care? A prior nursing home stay for home health care coverage? Other?
10. Is the policy guaranteed renewable?
11. What is the age range for enrollment?
12. Is there a waiver-of-premium provision for nursing home care? For home health care?
13. How long is confinement before premiums are waived?
14. Does the policy have a nonforfeiture benefit?
15. Does the policy offer an inflation adjustment feature? If so, what is the rate of increase? How often is it applied? For how long? Is there an additional cost?
16. What does the policy cost?
- Per year
- With inflation feature
- Without inflation feature
- Per month
- With inflation feature
- Without inflation feature
17. Is there a 30-day free look?
Obviously, the ideal time to purchase a nursing home policy would be the day before you go into the nursing home but, things are not that simple. You must apply for this coverage when you are in good health. The younger you are when you purchase nursing home insurance, the lower your premium will be for the rest of your life. Remember, also, that you must also qualify for this insurance, that is, give medical evidence to the insurance company that you meet the company’s underwriting requirements for Long Term Care insurance. Generally, the younger you are when you apply, the better your chance of acceptance.
To summarize, none of us wants to be forced to accept a lesser standard of living because of a nursing home confinement of a loved one. Nor do we want our loved ones to suffer financial hardship because of our own confinement. If you have assets that you want to protect, you should consider long term care nursing home insurance to protect those assets.
Source: www.hiaa.org/cons/guideltc.html
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