|
Long-Term Care Insurance – Why Now?
By Courtney
As we age, what if we need help getting out of bed, getting dressed, eating, or bathing?
It can come as an unpleasant surprise to learn that these conditions are not covered by medical insurance or even Medicare. They require what's called “custodial care,” not “medical care.” And they can be very expensive – over $90,000 a year in San Francisco.
You may have heard that Medi-Cal will pay for “custodial care.” That's true, but only if you've already used up your own money. You get to keep only $2,000, your house, your car, and $35 per month in income.
If you are an LGBT couple, you need to be particularly careful. If one partner needs to enter a nursing home and spends down assets to qualify for Medi-Cal, the other could lose the home that both share.
So how can we provide for our future care? Of course we could save, stay healthy, pay our own way for as long as possible, and then depend on the “kindness of strangers.”
Or we can do what we do in other parts of our lives and insure for the risks that we don't want to handle on our own. We buy health insurance in case we get sick or get hurt. We buy car insurance in case we're in an accident or our car gets stolen. We buy renter's or homeowner's insurance to protect our belongings.
Why not buy a policy to protect the quality of our lives? Why not protect our assets so we can use them to enhance our lives and be able to choose the type and location of care that we want?
This is the role of long term care (LTC) insurance. It can pay for us to receive care in our homes, a residential care facility (assisted living) or a nursing home. It can help us afford better care than if we were on Medi-CAL and had to settle for anything that's available.
To obtain LTC insurance, we have to be able both to afford it financially and qualify for it medically. The younger we are when we apply for it, the less expensive the premiums are. And if we are healthier when we are younger, then that is when we are more likely to qualify.
When choosing a policy, we need to decide about a number of features. One is a daily benefit ($170/day is the national average cost for nursing homes, although they can cost $246 a day in San Francisco).
Another is the elimination period – what length of time we pay for our own care before the insurance company starts paying benefits.
And we need to choose how long the insurance company will pay benefits.
If a 55-year-old person chose a plan with a $150 daily benefit, a 90-day elimination period, and a four-year benefit period, the annual premium could range between $2,025 and $2,795 depending on the insurance company. A younger person would pay less, an older person more. Paying 20 years of premiums at $2,795 per year would cost $55,900, but it would still be less than today's cost for one year in a nursing home.
Fortunately for LGBT couples, three companies that sell California Partnership plan policies offer domestic partner discounts when partners both apply. This could reduce annual premiums by 25%.
It's worth thinking about.
-- Mary Anne Courtney (affectionately known as just Courtney) is a Certified Financial Planner®, Enrolled Agent and California Insurance Agent specializing in Long Term Care Insurance and Tax Planning and Preparation for LGBT individuals.
|
|
