There are many reasons why nursing home insurance is so crucial. Close to 70% of people reach age 65 will have need for some care in a nursing home, or something similar in their lifetime. The average stay in a nursing home is over two years. The average cost? Just under $178,000. Can you write a check for this? 40% of us pay out of pocket. 50 percent of all couples and over two thirds of single persons have no assets left in less than 12 months of entering a nursing home.
There are only three ways to pay for your time in a long term care facility: The money can come from Medicaid, your assets, or Long term care insurance coverage. For people with low income and assets, Medicaid pays for nursing home care. In most parts of the country 50% to 65% of nursing home residents are receiving assistance from Medicaid. It is probably not coincidental that nursing homes funded primarily by Medicaid (which offers a very low reimbursement rate) generally offer a lower standard of care than privately funded nursing homes.
It should be noted that Medicare supplement does not pay for assisted living expenses. Medigap only pays for a limited amount of skilled nursing care after a qualified hospitalization. The most common type of care – custodial – is NOT covered at all! 75% of these costs (as opposed to custodial nursing home costs) are paid by the family, out of pocket.
Few people can fund nursing home and/or assisted living care, and still leave enough for a surviving spouse’s living costs and the nursing home care that they may need in the future.
As the average retirement “nest egg” is slightly under $350,000, very few families can afford the cost of even one elderly parent requiring a typical stay in a nursing home, let alone two. It’s not uncommon that one spouse becomes ill and needs expensive care, absorbing most or all of the family assets, leaving the remaining spouse in poverty.
Many experts recognize the need for Long Term Care insurance coverage for estate preservation for the longest period of time.
Yes, there are some people who will never use Long Term Care insurance – close to 30%. Even so, the average long-term care insurance policy purchased by a 65-year-old and held until death pays out 82 cents for every dollar of paid.
Because Long Term Care contracts are not standardized and there are such a wide variety of options available for coverage, it is may not be a good idea to research and buy LTC without help. An experienced broker will know which coverages each insured needs, and be able to able to give you good advice. An experienced agent is the best resource to compare policies, coverage, and endorsements. An independent agent can make sure the policy you buy is the best policy to meet your needs.
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