Mark Reckman - Who should purchase long term care insurance?

WHO SHOULD PURCHASE LONG-TERM CARE INSURANCE?Buying long-term care insurance is one way to protect against the high cost of long-term care. However, this type of insurance may not be for everyone, so consider all your options. Long-term care – care in a nursing home or at home – may be paid for in four main ways:1. Out-of-pocket. If you have sufficient resources, you can pay for your long-term care needs with money you have saved. 2. Medicare. Medicare covers short-term nursing home stays after an illness or injury that require hospitalization. Medicare covers up to 100 days of “skilled nursing care” per illness. But, rarely do you get the full 100 days. Usually, it’s more like 20 days.3. Medicaid. If you have limited resources, Medicaid will pay for nursing home care. In order to be eligible for Medicaid benefits an Ohio nursing home resident may have no more than $2,000 in “countable” assets (it may be higher in some states).4. Long-term care insurance. With long-term care insurance, you pay monthly premiums to buy a policy that pays your long-term care costs if you are admitted to a nursing home or need home care (depending on the policy).Determining whether you need long-term care insurance depends, in large part, on your financial situation. The cost of a long-term care insurance policy varies considerably, depending on your age when you purchase the policy, the benefit period, and the level of benefits, among other things. But the premiums are expensive. Therefore, if you have the resources to selfinsure your long-term care and still have money left over, you likely don’t need to buy a long-term care policy. On the other hand, if you cannot afford to pay monthly long-term care premiums, you will likely be able to qualify for Medicaid.Another factor to consider is your family’s health history. A common reason for needing extended long-term care is dementia. If you know you have a family history of Alzheimer’s disease, for example, it may make more sense to buy insurance.Of course, we never really know what the future may bring. Long-term care insurance is like any insurance policy: we don’t know if we will ever need it. In general, long-term care insurance is something to consider if:1. You have the resources to pay the premiums, even in retirement;2. You want to preserve your estate for your heirs; and3. You don’t have enough money to self-insure. How much do you need to “self-insure”? That depends on your income and your marital status. If you are a single retired teacher with a good pension (more than $5,000/mo) then a million in investments is probably enough. If you are a married “1099er” with no pension, it would take more like three million. And, of course, if you have no children to leave your money to, that changes everything. LTC insurance is not for everyone. Folks with no resources cannot afford it and folks with substantial resources can self-insure. The folks in between need to look at this.AARP has excellent material to help walk you through this decision without bias. Go to their website for more information or call there.