Long-Term Care Insurance

If you or your spouse should become sick or disabled and must spend time in a nursing home, you may very well be facing financial devastation. Did you know that the typical cost for a nursing home in Ohio today is between $60,000 and $100,000 per year? Could you afford to pay for care this expensive? Many people INCORRECTLY believe that private health insurance or Medicare will pay for the cost of the nursing home. In reality, there is only one type of insurance which will help pay for nursing home care. That is long-term care (LTC) insurance. This type of policy typically will provide a daily dollar benefit to help cover the cost of a nursing home, assisted living or even medical care at home. Unfortunately, the premiums for LTC insurance can be very expensive and vary based upon many factors, the most important of which is your age at issue date. The same policy may cost $1500 annually for a 60 year old, $3000 annually for a 70 year old, and as much as $8000 annually for an 80 year old person.

However, the income tax law may allow a deduction for premiums paid for LTC, if your medical costs exceed 7-1/2% of your adjusted gross income. Another perk to you is that the benefit paid to you under your LTC policy is generally income tax free, up to a certain daily rate or the actual cost of care, whichever is greater. Plus, the Deficit Reduction Act of 2005 also made LTC insurance more attractive with regard to Medicaid eligibility. The new program, the "Long Term Care Partnership," was recently enacted in Ohio. The program encourages the use of LTC insurance by providing that if you have a LTC policy, and you use the benefits from that policy to pay for the nursing home before applying for Medicaid, then you get to keep extra assets in an amount equal to the LTC benefits paid. For example, if you are single, you can normally keep only $1500 in assets in order to be eligible for Medicaid. But, if you had a LTC policy, and you used up all the benefits under the policy, say $175 per day for 3 years, or about $192,000, then when you apply for Medicaid, you get to KEEP up to $192,000 in assets instead of only $1500. This could be a great incentive to purchase LTC insurance when you are younger and healthy and the cost is lowest.

If you do decide to purchase a LTC policy, please be sure to read the policy carefully and make sure it is appropriate for you. Some suggested guidelines for investigating a policy include:

1. Coverage for all nursing home care levels at a minimum of $200 a day.

2. At least five years of coverage.

3. Assisted Living and Home health care coverage at the same level, or at least 50% to 75% of the nursing home care coverage.

4. A waiting period of not more than ninety days.

5. Guaranteed renewal and level premiums for life.

6. Alzheimer's disease coverage specifically allowed.

7. Inflation riders allowing the daily benefit to increase on an annual basis.

8. An A.M. Best Company rating for the insurance company of A or A+.