Paying for nursing home care is a complicated and rather grim topic. Nevertheless, it is an important issue for families.
Seven out of every ten seniors will need long-term care at some point during their lifetime. Without a standalone long-term care policy, out-of-pocket costs could range from $20,000 to $100,000 a year, depending on the type of care needed.
In fact, the number one cause of family bankruptcy in America is unexpected medical bills. Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
The reality is most employer-sponsored private insurance plans do not cover long-term care services, nor does Medicare. Medicare typically does cover the first 100 days a resident stays at a nursing home, subject to a few conditions. For example, the resident must have a three-day qualifying hospital stay within 30 days or less, prior to admission to the nursing home.
What is long-term care insurance?
Long-term care insurance is a type of insurance policy that can help pay for many types of long-term care, including both skilled and non-skilled care. Long-term care insurance is a great idea for many people who want some sense of security regarding their future care. You should keep in mind that long-term care insurance can vary widely. Many policies cover only skilled nursing care and exclude basic custodial care. Other policies cover a range of services such as assisted living, home health, medical equipment, and others.
State laws differ widely on what can and cannot be included in a long-term care policy. Under Virginia law, there are a number of pro-resident provisions:
- there can be no requirement for a prior hospital or skilled nursing home stay as a trigger for benefits;
- all pre-existing conditions must be covered after six months;
- policies must provide benefits for a minimum of 12 months; and
- no policy may exclude or limit benefits based on Alzheimer’s disease, dementia, or other similar diagnoses.
If you are considering buying long-term care insurance, decide what coverage you need and can afford. Call and speak to the insurance companies to determine what care is covered. Before you buy long-term care insurance, make sure to have an explanation of the policy provisions in writing. Do not rely on anything an insurance broker says over the phone or in person. We tell clients all the time: if it was not written down, it did not happen.
How much does long-term care insurance cost?
Long-term care insurance can help safeguard your assets and protect financial independence, but it can be expensive. Long-term care premiums vary by age, gender, the type of plan, and insurance carrier.
On average in 2021, a single 55-year-old male purchasing a $165,000 policy benefit would pay $950 per year, while a single 55-year-old woman would pay $1,500 annually.
Adding 10 years, a 65-year-old single male would pay $1,700 per year for the policy, while a single female of the same age would pay $2,700.
What age should you buy long-term care insurance?
The best age to shop for a long-term care policy, assuming you are still in good health and eligible for coverage, is between 60 and 65 years old. Couples might take a look five years earlier.
Why is the so-called “five-year window” between 60 and 65 the best time to get long-term care insurance? In short, you are not too young and not too old. Like Goldilocks, you are “just right.”
 Long-Term Care Insurance Cost: Everything You Need to Know, MarketWatch (2021). Available at https://www.marketwatch.com/picks/guides/insurance/long-term-care-insurance-cost-everything-you-need-to-know/.
 Himmelstein, David, et al., Medical Bankruptcy: Still Common Despite the Affordable Care Act, American Journal of Public Health, 109, 431-33 (Feb. 6, 2019). Available at https://doi.org/10.2105/AJPH.2018.304901.
 Facts About Long-Term Care Insurance in Virginia. Virginia State Corp. Comm’n (May 2021). Available at https://scc.virginia.gov/getattachment/c2f1f25a-ad7d-4ae7-b0dd-7b3ca7750a7f/ltcfacts.pdf.
 Note 1.
 Shell, Adam. Buy Long-Term Care Insurance at the Right Age to Get the Best Value. AARP (Dec. 20, 2019). Available at https://www.aarp.org/caregiving/financial-legal/info-2019/when-to-buy-long-term-care insurance.html#:~:text=The%20optimal%20age%20to%20shop,a%20look%20five%20years%20earlier..