Q. I am still working full time, but I am starting to plan for life after retirement. I have heard about long-term care insurance, but I’m not sure if it’s right for me. Do you have any information about it?
A. Long-term care insurance covers nursing-home care, home health care, and personal or adult day care for individuals who need assistance on a daily basis. Buying a long-term care insurance policy can be an effective way to protect yourself against the substantial costs of paying for long-term care.
A good policy can help you avoid exhausting your life savings and provide access to the widest variety of services in your area. It may help you avoid depending upon assistance from family, friends, or the MassHealth Medicaid program. However, long-term care insurance isn’t for everyone, according to the Massachusetts Division of Insurance. If you already have health problems (for example, Alzheimer’s disease, Parkinson’s disease, or other less serious conditions), insurers may consider you to be high-risk and decline to issue a long-term care insurance policy.
Here are other considerations:
You should not buy long-term care insurance if:
- You can’t afford the premiums
- You have limited assets
- Your only source of income is a Social Security benefit or Supplemental Security Income
- You have trouble paying for food, utilities, medicine, or other necessities
You may want to consider buying long-term care insurance if:
- You have significant assets and income to protect
- You want to pay for your own care
- You want to stay independent of the support of others
Now is the time to consider if you can afford the premiums. Policyholders pay premiums for 20 years or more before they need services. Premiums can cost several thousand dollars per year, depending upon your age when you purchase the policy, the policy type, and the amount of benefits you choose. For example, your premiums will be higher if you buy a policy at age 75 than at 65.
Also, although the highest-priced policy might offer the most benefits, it may not be your best option. You must decide whether it fits your needs, is within your budget, and will remain affordable until you tap its resources.
Private insurance companies and fraternal benefit societies both sell long-term care insurance. There are two basic types of policies: individual policies and group policies. Individual policies are sold directly to consumers, usually by insurance agents, direct mail, or phone solicitations. The Massachusetts Division of Insurance lists more detailed information about these policies.
Long-term care policies vary greatly. They may include benefits for care in a nursing home, an assisted living facility, an adult day care center, or in your home. Most will not pay for services provided by family members. Determine what types of facilities are covered by the policy. If you purchase a policy limited to nursing home care, your insurer will probably not pay for services you receive in your home. Flexible policies cover any necessary long-term care service in whatever setting you need. These are usually more expensive than those that limit the types and settings of services.
Most long-term care policies cap both the amount they will pay each day, and, over the life of the policy, a maximum number of days or dollars – the lifetime maximum benefit.
For more information about long-term care insurance visit: Do You Need Long-Term Care Insurance | Mass.gov