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Are you ready for the long-term?

September 11, 2010|By MARIE GILBERT
  • Only millionaires don't have to worry about paying for long-term care, said Gary Wright with Allstate Insurance Company in Hagerstown. He said they have the funds to pay for the cost of nursing or in-home care, compared to an average person.
By Kevin G. Gilbert/Staff Photographer,

Your father can no longer live independently.

His eyesight is failing, his mobility is limited and he is becoming forgetful.

The family is in agreement. He needs round-the-clock care.

But sitting in a nursing home administrator's office, reality hits you in the wallet.

The cost of this particular facility is more than $70,000 a year.

Doing you homework, you discover the cost isn't out of line with other assisted living and nursing home residences.

And providing in-home care will be just as much of a financial burden.

It's decision time and your options are challenging.

For years, people have struggled with the issue of how to afford quality care when physical and cognitive impairment begins to alter their lives.

Choices are available, but the cost of such services often can decimate a person's assets.

Ordinary health insurance policies usually do not pay for long-term care expenses. Medicare pays for only short-term medical care at home or for a limited stay in a nursing home after hospitalization. And Medicaid pays for long-term care but not until people have already spent the majority of their financial assets.

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That's why many people are investigating another option: long-term care insurance, which can help protect assets, as well as pay for expenses.

According to the U.S. Department of Health and Human Services, long-term care refers to the many services used by people who have disabilities or chronic illnesses.

Long-term care can range from in-home assistance with eating or dressing to a illness or disability that can mean living the remainder of your years in a nursing home.

Generally speaking, there are two ways to cover long-term care over the long haul, the National Clearinghouse for Long-Term Care says. One is private pay from personal income and resources. The other is long-term care insurance.

If you're a millionaire, you probably don't have to worry about how to pay for long-term care, said Gary Wright, an agent with Allstate Insurance Company in Hagerstown.

"A person with that kind of money will have no qualms about paying $6,000 to $9,000 a month for nursing home or in-home care," he said.

"But for the average person, it becomes a problem."

Wright said he began to think about his own long-term care several years ago and opted for a long-term insurance policy.

While long-term care insurance is a relatively new product, it works in a manner similar to life coverage, Wright said. The owner of the policy pays monthly premiums (or sometimes varying forms of lump sums) to the insurance company so that, should long-term care become necessary, the company will foot the bill based on the extent of the coverage purchased.

Wright said different options are available, depending on a person's needs and financial situation. He selected a 10-year plan, which means paying monthly premiums for 10 years "and then it's done."

Another option is making payments until you're ready to start using it.

Wright said over the past few years, more and more people have become familiar with long-term care insurance.

"I don't think you can live in this day and age and not know about it," he said.

The problem is convincing people it's something they might need.

"When you're 20 or 30 years old, you're not thinking about getting older and needing long-term care," Wright said. "When people begin to ask questions is when a parent or loved one needs such care. Then, all of a sudden, they begin to see the importance."

Wright said, ideally, people should buy long-term care policies when they're young or middle-aged. The older you get, the more you pay because it's closer to the time to collect.

Wright said statistics show that about 60 percent of Americans end up in a nursing home for some period of their lives - whether it's rehabilitation or long-term.

"We all know that such care can be a financial burden for families," he said. "This is one way to eliminate that burden."

According to the National Clearinghouse for Long-Term Care, those people considering long-term care insurance should first get an idea of how much nursing home and assisted living facilities in their area charge, as well as estimated increases. Inflation protection is crucial, especially for younger people.

Then they should get the broadest coverage possible by making sure that a policy covers home health care, nursing home care, adult day care and care in an assisted-living facility.

Policies also should cover a wide range of illnesses and injuries. Not long ago, policies routinely excluded coverage for Alzheimer's and dementia, two of what are now the most common reasons for seeking long-term care.

Finally, your best defense is this: Find an agent who is experienced in long-term care and who fully understands your needs. Also, read your policy carefully for any health-related exclusions or other reasons to deny coverage.

But long-term care insurance does have its disadvantages, reports the AARP. While it is much less expensive than the cost of a nursing home, long-term care insurance is not cheap. Depending on age and health, the cost could easily be several hundred dollars a month and several thousand dollars a year.

Be wary of buying long-term care insurance if the cost of the premiums will lower your standard of living. Also, decide whether you can afford premiums if your income declines.

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