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How Much Should I Pay for Long-Term Care Insurance?

There is no such thing as a “one-size fits-all” LTCi policy. There are multiple possibilities to consider when creating a plan that works for you. Such as:

  • How will you be cared for?
  • Are you married or single?
  • Do you have children? If so, do they live close by?
  • What do you think your retirement income will be?
  • Do you have funds allocated for your long-term care needs?
  • Can you afford the premium expense?

Since no one has a crystal ball, it is crucial to have some type of long-term care plan in place as soon as possible. The policy should be created to cover care in all types of environments: at home, in a nursing home or assisted living facility or adult day care. While there are policies that pay only for care at home (a non-comprehensive policy) you should consider a plan for care in any environment (a comprehensive plan).

When putting together a plan, think about what your resources will be. For example, if you are collecting income from Social Security, a pension and investments it wouldn’t be necessary to invest in a policy that pays for the entire monthly cost of care. In that case, you would buy something that provided benefits for ½ - 2/3 of the total cost and you would plan to pay the balance out of your pocket. This is known as “co-insuring” and can help keep the cost of the insurance down.

The risk of needing LTC services for an extended period is even greater for women than it is for men. Think about the following facts:

  • Women outlive men
  • Most women over the age of 85 live on their own
  • There are more women in nursing homes than men
  • Men receive more home health care than women before entering a facility

It is much harder for a single woman to continue to live at home once she starts needing assistance with the activities of daily living. Accordingly, women should plan for more facility care than home health care.

However, most men will be cared for at home by their spouse for as long as possible. When a married man goes into a facility it is normally for one of two reasons: either the care got too expensive to be continued at home; or his caregiver (in most cases a spouse or daughter) couldn’t continue providing the care. Once in a facility, men don’t usually live very long. That’s why, a married man can feel comfortable designing a plan around the costs of home health care and plan on co-insuring the cost of a facility stay.

It is important to apply as soon as possible. This is a health-based insurance policy and because of this, you must be healthy enough to qualify for the policy. Alzheimer’s, renal failure, Stage III or IV cancer are just a few examples of conditions that would stop a person from getting this type of insurance. If you have questions about your insurability, you can ask your agent to pre-qualify you with the insurance company. It is important to answer all of the health questions candidly and completely on the application.

Don’t not rely on Medicare to pay any of your LTC costs. In most cases, Medicare doesn’t pay for long-term care. Medicare pays only for medically necessary care in a skilled nursing facility or home health care and you must meet certain stringent conditions for Medicare to consider payment for these types of care. If Medicare does pay for your care, it will only provide benefits for the first 20 days. The next 80 days you are required to pay a co-payment of $144 per day * and after 100 days, Medicare stops all benefits.

Medicaid (Title XIX) is also known as Welfare. In order to be eligible for Medicaid you must “spend down” your own assets first. A “spend-down means you could be forced to liquidate your real estate, stocks, land, investments – just about anything that could be turned into cash. Only after you have spent-down to the necessary state levels will you receive financial help from Medicaid. Even so, Medicaid is not free. Your estate could be ordered to pay back any funds you were eligible for during your illness. You can see the necessity of planning ahead for your long-term care needs. Contact Sun Coast Legacy Advisors today and let our agents help you customize a plan that’s perfect for your situation.

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