Make the best senior care decision
It’s normal to worry about whether you can afford your senior years. Your retirement savings may cover the cost of living — but the cost of long-term care is something else entirely.
There’s a good chance that somewhere down the road you’ll need medical care beyond regular doctor visits and short hospital stays, which can get very expensive very quickly. Senior care insurance, also known as long-term care insurance, can help with the cost of senior living.
Here’s a quick guide to the costs and benefits of long-term care insurance.
“Long-term care” means day-to-day help to live as you live now. Many people think of long-term care as strictly nursing home care, but that’s false. It can include much more, including help with activities of daily living, home care, and adult day care. Long-term care insurance — often referred to as senior care insurance or nursing home insurance — is one way to pay for long-term care. Coverage varies but often includes:
It’s important to know exactly what services and types of facilities a senior care insurance policy covers. Personal care homes, for example, are often not covered, according to the National Association of Insurance Commissioners (NAIC). Always talk to your insurance provider about coverage before choosing care communities or services.
You’re generally eligible for senior care insurance benefits when you’re no longer able to perform two activities of daily living — or ADLs — on your own. ADLs include bathing, continence, dressing, mobility, eating, and toileting. Another common eligibility trigger is cognitive impairment.
Many factors affect the cost of long-term care insurance, but you can expect to pay at least $1,500 per person each year. The average annual premiums in 2020 were:
Premium rates for long-term care insurance vary from one provider to another.
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You could spend more than $3,000 more a year for the same plan, depending on which company you buy coverage from, according to the American Association for Long-Term Care Insurance. This is why it’s important to work with an experienced agent when looking for insurance.
Your cost for a long-term care insurance plan also depends on your personal situation.
There are two important things to consider when deciding whether to buy long-term care insurance:
A person turning 65 in 2021 has a 70% chance of needing some type of long-term care, according to the U.S. Department of Health and Human Services. One in five will need support for longer than five years. Women typically need care longer (3.7 years) than men (2.2 years); the average length of long-term care is about three years.
Then there’s the cost. Medicare does not cover long-term care. It may cover short-term care in a nursing home after a hospital stay.
Based on an annual survey by Genworth, a long-term care insurance provider, the median costs for different long-term care services in 2020 were as follows:
Simply put, the likelihood you’ll need long-term care is high, and the cost is high, too.
Still, most people don’t buy long-term care insurance, largely because premium rates have increased over the past few decades. There are also fewer insurance companies offering the coverage.
Our advisors help 300,000 families each year find the right senior care for their loved ones.
Your decision to buy senior care insurance will depend on your personal financial situation. If you have savings to pay for care out of pocket, then paying for insurance premiums may be unnecessary.
Keep in mind that the numbers listed above are the median costs, so the cost of your care could fall below or above those numbers. The cost of care at an assisted living community or nursing home depends on the amount of help you need. For example, if you require specialized memory-care services on top of daily food and housekeeping services, your cost could be higher than the median.
Your location also matters. If you live in a state with a large population of senior citizens and an abundance of senior living communities with a high turnover rate — and you only need basic care — you might find much lower prices for a room at a nursing home.
The main benefit of buying senior care insurance is cost savings. Your rates for premiums will be far less than what you’d pay for care without insurance. With insurance, you can preserve your savings, assets, and financial independence.
Other benefits include:
The best time to buy long-term care insurance is in your mid-50s, according to the American Association for Long-Term Care Insurance. Insurance companies know that most people begin to develop more serious health issues after age 55, so premiums are higher for older applicants. But if you’re around 55 and in relatively good health, you’re still young enough that insurance providers are likely to offer the best rates.
|Your Age||Age affects the premium you’ll pay. As age increases, so does the possibility of developing health conditions that will make it difficult for you to buy insurance. Most companies direct their marketing efforts accordingly.|
|50-70||Within this range, you’ll have many companies and policies from which to choose. Premiums will be more affordable.|
|80-84||A few companies market to this age range. Some companies sell only one year of coverage to those 80 and older.|
|85 and Older||Few companies sell to people older than 84. Very elderly people should carefully consider the wisdom of purchasing long-term care insurance because of its cost.|
Here are few things the NAIC recommends you keep in mind when looking for the right plan:
The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.