For many medical insurers, suffering from old age is different than suffering from chronic illness. So, more and more people are finding themselves paying out-of-pocket for the assistance they need to live a healthy life.
Long-term care insurance is one of the few ways many Americans will be able to afford the assistance they require later in life. The December issue of Prevention magazine features an article about long-term insurance and the magazine's editor, Rosemary Ellis, visited The Early Show to offer insight.
Many Americans suffer from the wear and tear of old age, which normally means problems remembering medications, dressing, preparing meals, walking, and whole other host of conditions.
And the cost of this day-to-day assistance can be astronomical. For example, a home health aide costs at least $200 per day. And experts say nursing home care probably will quadruple in the next 25 years to almost $200,000 per year. Some insurance covers portions of that type of care, usually only when it is associated with a hospital stay.
As for Medicaid, though it covers this kind of care, you have to spend down your assets in order to be eligible, Ellis says, "You can keep your house, one car and some cash, but not much. If you want to protect your assets, you will want to look into getting long-term care insurance. Also, some assisted-living facilities don't accept Medicaid's below-market fees."
So, since most of us are likely to need it, Ellis recommends start thinking about getting coverage when hit your 50th birthday. Once you have a chronic health condition, you won't be able to be covered. You will become eligible for long-term care insurance when you require help with at least two lifestyle activities. There is, however, a mandated waiting period - around 90 days.
Ellis says, the following are some things to consider:
Amount Of Premiums - If the yearly cost is more than 8 percent of your retirement income, it may be too expensive. If it is less than that, then you can probably afford it.
Check Company Track Record - Make sure the company will still be in business when you become eligible for long-term care. How? Hire an insurance broker who represents a number of companies. A broker can help you figure out the track record of an insurance company.
Premium Changes - There is little you can do if premiums change. Just be aware that premiums can increase. Sometimes it is implied that the rate of the premium will not change. On record, there are people whose premiums increased by 50 percent.
Elimination Period - Know that your policy won't kick in until after a certain waiting period. Prevention recommends getting a policy with a 90-day period. A shorter waiting period means a bigger premium. All policies include a waiting period between the time that you become eligible and the time you start receiving payouts. The money you spend during the waiting period is not reimbursable.
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