A long-term care policy protects you now and as you age

For many people, the idea of planning your retirement and long-term care seems too daunting to think about. However, your financial and physical health could depend on the plans you make now.

According to the Department of Health and Human Services, only 57 percent of people with long-term medical care needs are over age 65. And the price tag is staggering: The average cost of a nursing home is about $70,000 a year. In-home care, while it might save money, can still easily cost upwards of $2,000 a month.

Those health care bills may be decades away, but to cut costs on elder care and protect your hard-earned savings, it may pay to purchase LTCI. You should get Long-Term Care Insurance before you actually need it. Here's why:

LOW PREMIUMS

Purchasing in your 50s will secure you a policy that is far cheaper than at age 65 or after you’ve developed health problems. Your premiums will not increase as you age, unless your provider raises its rates across the board. Buying while you are young and healthy also boosts the likelihood that you will be able to get coverage. 

CARE AFTER AN ACCIDENT

Accidents happen at every age. LTCI has covered many younger people with significant assets who suffered accidents that left them unable to work and required them to be in a nursing home. Remember, LTCI is not the same thing as disability insurance, which only replaces your income. LTCI can pay for care in a nursing home or an assisted living facility.

RETIREMENT FUND PROTECTION 

Since Medicare does not cover the cost of nursing homes or home health care, your retirement security (or your parents’, if you end up in their care) would be jeopardized if you needed long-term care at any point. LTCI may keep those savings safe.

CHOOSING A LONG-TERM CARE POLICY

Before you select a LTCI policy, there are many factors to consider. The following list will help you to weigh some of the primary issues, but it's important to consult with a qualified professional. As with any insurance, you should read the policy carefully after talking to an agent or broker. Review the outline of coverage you are given before signing on.

Coverage
Make sure that the policy extends not only to nursing facilities but also assisted living centers, home care, visiting nurse services and adult daycare.

Inflation Adjustment
Make sure your policy adjusts annually for inflation. Some policies also give you the option of adding more coverage at a later date.

Benefits
Some policies will cover you for a set amount of time, from two to six years or the rest of your life. If you are married consider a shared care rider --  if one spouse needs no coverage at all, the other can make use of the entirety.

Generally policies pay a daily or monthly benefit. Bear in mind that if the cost of your care exceeds the benefit, you must pay for it out of pocket. If it's less, you can carry it over.

Pick a Top Company
Be on the lookout for companies that have a history of big rate hikes or have a large number of complaints against them-- check into these matters with your state’s insurance department. It’s also a good idea to choose a well-established company. Since it may be a long time before you start drawing on the policy, you want to work with someone who’ll still be around.

Get a Tax-Qualified Plan
Tax-deductible premiums and tax benefits are only possible with plans that are recognized by the Health Insurance and Portability Act of 1996.

THE BOTTOM LINE

Long-term care may seem like a far-off proposition, but now may be the time to consider buying a policy that could potentially protect you and your assets now and for decades to come.