Each year, homes catch fire and most homeowners have insurance coverage. Each year, cars are destroyed in auto accidents, and most car owners are covered, and each year, millions of people 65 or over will have a long-term nursing home stay, yet only a small fraction of these people are covered.
As the population of older Americans increases, so is the need for nursing home care.
As a result, long-term care insurance has become a necessity for many people. This type of insurance can be an inexpensive way to protect your life savings from the devastating cost of a lengthy nursing home stay.
In addition, individuals may be able to deduct long-term care insurance premiums (subject to certain limits) just like any other medical expenses that exceed 7.5 percent of adjusted gross income. The tax break applies to all long-term care policies issued before 1997. Those issued on or after Jan. 1, 1997 must meet federal guidelines to qualify for the deduction. In addition, long- term care benefits may be excluded from taxable income.
This is good news for many Americans. As the baby boom population ages and life expectancy increases, the need for long-term care also increases. There are an estimated 35 million Americans over age 65, and this segment of the population is expected to double by 2030 according to the National Institutes of Health. With nursing home costs skyrocketing and Medicare paying about 3 percent of those costs, few people have the financial resources to handle a long stay in a nursing home.
Long-term care insurance can answer this need. It can help cover the cost of a nursing home stay, home care and other types of long-term care for as long as the patient needs them. When evaluating long-term care insurance, look for the following features:
Financial quality of the company - Choose a long-term care provider that is highly rated with respected agencies. Look for at least an "A" rating from A.M. Best and at least an "A Plus" by Standard and Poors and Duff and Phelps.
Look for no age limits. After you are accepted for coverage, your policy should pay benefits no matter what age you are when you file a claim.
Make sure you have coverage for all levels of care. Your policy should pay benefits no matter what level of care you receive, from short-term skilled nursing to long-term custodial care.
Parkinson's, Alzheimer's and senility care - Look for policies that cover these common conditions. Keep in mind that no policy will cover these problems if they are preexisting conditions, so you need to have your policy in effect before they develop.
Stable premiums - Once you are covered, your premium should remain unchanged. Most companies reserve the right to increase premiums for a group or class of policy holders, but look out for companies that historically have raised their rates.
Claims payment history - Be certain that the company has a solid track record of paying claims and providing timely service. Some companies audit and publish their historical claims track record history.
Cheapest is not always the best - Many policies have low premiums and offer features that you may find attractive. A word of caution. You are buying a benefit that you may not receive for many years. Rate increase and inadequate service will quickly negate any benefit of a low initial premium.
These are just a few things to look for in long-term care insurance, and I hope that they help you when making a decision on coverage. Be sure to evaluate more than one policy and only buy from someone you trust.
If you ever require a nursing home stay, the last thing you want to worry about is the cost. Fortunately, our legislators are beginning to recognize this problem and have passed new tax laws to make long-term care insurance more affordable. Long-term care insurance not only can protect your savings but also prevent you from being a financial burden on your family.
If you would like a complimentary quote on quality long-term care insurance, call me at 882-6070.
Carol Perry, a Northern Nevada resident since 1983, represents the firm of Edward Jones Investments in Carson City.
