5 tips to find­ing long-term care in­sur­ance

A guide to get­ting cov­er­age that won’t break the bank

USA TODAY Weekend Extra - - PERSONAL FINANCE - Bar­bara Mar­quand @bar­bara­mar­quand NerdWal­let Mar­quand is a staff writer at NerdWal­let, a per­sonal fi­nance web­site. Email: bmar­quand@nerdwal­let.com. NerdWal­let is a USA TO­DAY con­tent part­ner.

Years from now many Baby Boomers will need help with the daily stuff of life, like dress­ing, bathing, eat­ing or re­mem­ber­ing to take med­i­ca­tion.

Reg­u­lar health in­sur­ance, in­clud­ing Medi­care, doesn’t pay for help with these “cus­to­dial care” tasks, ex­cept in limited cir­cum­stances. Long-term care in­sur­ance does. Yet faced with the cov­er­age costs, many long-term care in­sur­ance shop­pers get sticker shock and give up. Here’s how to keep the price af­ford­able.

BUY SOONER, NOT LATER

“The key to long-term care in­sur­ance is to ap­ply early while it’s in­ex­pen­sive,” says Kevin Lynch, as­sis­tant pro­fes­sor of in­sur­ance at the Amer­i­can Col­lege of Fi­nan­cial Ser­vices in Bryn Mawr, Pa.

You can buy long-term care in­sur­ance up to age 75 from most com­pa­nies, but you’ll pay more at older ages and if you have health con­di­tions. Among 65-year-old ap­pli­cants, 28% will be de­nied be­cause of their health, Lynch says.

The ideal age to start shop­ping? “I think 50 is the magic num­ber,” says Deb New­man, pres­i­dent of New­man Long Term Care, an in­de­pen­dent in­sur­ance agency in Rich­field, Minn.

Don’t give up if you’ve passed the half-cen­tury mark. Ap­ply at least 60 days be­fore your next birth­day to get a price based on your cur­rent age, ad­vises Jesse Slome, ex­ec­u­tive di­rec­tor of the Amer­i­can As­so­ci­a­tion for LongTerm Care In­sur­ance.

WORK WITH AN IN­DE­PEN­DENT AGENT

Prices vary by in­surer for the same amount of cov­er­age. Work with an agent who can sell — not just quote — poli­cies from dif­fer­ent car­ri­ers, Slome says. A good agent will know which com­pa­nies will likely ac­cept you for cov­er­age based on your health and give you the low­est price. Get price com­par­isons even if you’re of­fered the op­por­tu­nity to buy long-term care in­sur­ance through a group, such as your em­ployer. If you’re healthy, you might find a bet­ter deal on your own.

START WITH A BUD­GET

De­cide what you’re com­fort­able spend­ing and ask the in­sur­ance agent for quotes that fit your bud­get, ad­vises Brian Gor­don, pres­i­dent of Maga Ltd., an in­de­pen­dent long-term care in­sur­ance agency. Gor­don dis­cour­ages peo­ple from buy­ing a pol­icy if they’ll strug­gle to pay the pre­mium.

Work with a fi­nan­cial ad­viser to re­view other op­tions if you can’t qual­ify or pay for long-term care in­sur­ance. Med­i­caid, the fed­eral and state in­sur­ance pro­gram for peo­ple with low in­comes, will pay for nurs­ing home care, but to qual­ify, you have to spend down most of your money first.

PLAN REAL­IS­TI­CALLY

Ac­cord­ing to the U.S. De­part­ment of Health and Hu­man Ser­vices, al­most 70% of to­day’s 65-yearolds even­tu­ally will need longterm care, and 20% will need it for longer than five years. But few folks want to think about that.

“First of all what pops into peo­ple’s minds is the dreaded nurs­ing home,” New­man says. Yet 80% of peo­ple who re­ceive longterm care live at home, ac­cord­ing to a 2013 Con­gres­sional Bud­get Of­fice re­port. About 18% live in nurs­ing homes and other care fa­cil­i­ties, and 2% live in res­i­den­tial se­nior com­mu­ni­ties that offer some sup­port but not round-the­clock su­per­vi­sion.

New­man en­cour­ages clients to buy enough cov­er­age to pay for home health care for a few years. The av­er­age an­nual cost of a full­time home health aide is $46,332, com­pared with $82,125 for a semi-pri­vate nurs­ing home room, ac­cord­ing to the Gen­worth 2016 Cost of Care Sur­vey.

Most long-term care in­sur­ance poli­cies re­im­burse you for care at home or in as­sisted liv­ing or a nurs­ing home. So if you buy enough to pay for home health care but in­stead go to a nurs­ing home, the pol­icy will pay at least some of the nurs­ing home costs.

Look at costs of care in your area to es­ti­mate how much cov­er­age to buy, Lynch ad­vises.

GO FOR A SIM­PLE VS. A SOUPED-UP POL­ICY

Ask for quotes for good, bet­ter and best cov­er­age from each com­pany to see costs at dif­fer­ent lev­els, Slome says. Avoid adding fea­tures, called rid­ers, that you don’t need.

“Keep it a good, sim­ple, longterm care pol­icy with­out all the bells and whis­tles,” Gor­don says.

An ex­am­ple is a “restora­tion of ben­e­fits” rider: If you need longterm care but then get bet­ter, the ben­e­fits you used are re­stored for a later date. But Gor­don says once peo­ple start to need longterm care, they usu­ally con­tinue to need it.

An in­fla­tion pro­tec­tion rider al­lows your ben­e­fits to grow to keep up with in­fla­tion. Re­duc­ing the in­fla­tion pro­tec­tion, from, say, 3% to 1% will drop the pol­icy price. If you’re older, say 70 in­stead of 55, you may be able to get by with less in­fla­tion pro­tec­tion, Lynch says.

“The key to long-term care in­sur­ance is to ap­ply early while it’s in­ex­pen­sive.”

as­sis­tant pro­fes­sor of in­sur­ance at the Amer­i­can Col­lege of Fi­nan­cial Ser­vices

A FI­NAL THOUGHT

Avoid an all-or-noth­ing ap­proach when buy­ing long-term care in­sur­ance. “Some­times peo­ple look to in­sur­ing 100% of the cost of the care,” Gor­don says. In­stead, think about costs you can han­dle and what you want to in­sure. “Don’t buy more than you need.”

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