Long-Term-Care Insurance
Long-term-care insurance is something you and your parents need to consider. Medicare pays about 2 percent of nursing-home costs nationwide; private insurance covers about 1 percent. Nursing-home care can cost $50,000 a year or more. One out of five people who enter a nursing home spend five years there; half of the people who enter nursing homes spend one year in it. Custodial care at home is not covered by Medicare or insurance.
Most people depend on Medicaid to be there for them if they need nursing-home care, but the government is trying to cut back on how much Medicaid will pay for long-term care. As the elder population continues to grow, the burden on the Medicaid system is going to increase. The baby-boom generation has just begun to reach retirement and tax an already overburdened system.
Long-term-care insurance offers some measure of relief. However, it is expensive. Like any other insurance, the costs will go down as more and more people buy into these policies and share the risk. Currently, the cost ranges from about $3,000 to $8,000 per year and depends on several issues, such as:
The kinds of benefits you choose such as nursing-home coverage, in-home care, and lifetime limits
The length of the waiting period before the policy kicks in
Inflation protection
Restrictions such as requiring a hospital stay prior to nursing-home care
The amount of daily coverage
A waiver of premium while the policy is being used
Fixed premiums
Coverage for dementia
Current age and health status
A long-term-care policy will not cover all expenses, but it can help greatly reduce the out-of-pocket expenditures. Using home-health and private-duty care services as opposed to nursing-home care will also reduce the costs for care, but this may not always be a viable option.
