The Cost of Long Term Care Insurance
What is the Cost of LTCI?
One of the more common complaints about Long Term Care Insurance (LTCI) is the overall cost. Yes, it’s likely cheaper than paying the full price out of pocket for home care services if you do use it, but it’s important to understand that the premiums on LTC insurance policies may be on the higher end.
Don’t mistake this for LTC not providing significant assistance to those searching for proper home care. Many have claimed it to be a life-saver in terms of senior assistance.
Additionally, it’s important to consider different variables to determine the cost of your LTC coverage such as:
The maximum benefits that the policy will reimburse you per day. Not all policies will work the same, and some policies will pay a different amount depending on the service that you receive while others have a flat-rate benefit that doesn’t change regardless of the service rendered.
Your current age when you purchase the policy. The healthier and younger that you are when you purchase the insurance, the lower the premiums will be. There’s been a healthy debate on what age is ideal to purchase LTCI.
Now, because LTC is so specific, many people consider it a supplement. It does in fact cover the LTC costs that health insurance, Medicare, and Medicaid might not cover, but it can’t supplant your primary health insurance.
According to the 2018 Long-Term Care Insurance Price Index, prepared by the American Association for Long-Term Care Insurance, the average annual premium for a 60-year-old couple is $3,490 per plan with a benefit of $150 per day for up to three years as well as a 90-day elimination period. Keep this in mind and adjust your finances accordingly if you’re seeking LTCI in the near future.
Can You Lower the Cost of Long Term Care Insurance?
Yes and no. But, there is a way to keep your overall costs down. For instance, obtaining your policy early can lower your premiums. Getting LTCI at age 55 as opposed to age 65 will be significantly cheaper. Waiting 10 years or more could result in a 34-40% increase.
A longer elimination period can also help you save money on your insurance as well. Remember, as long as you have enough money in your savings account to cover long-term care costs until the elimination period is over, choosing a longer elimination period will drastically lower your costs.
Check with your employers to see if they offer LTC insurance plans. Employee-sponsored plans are typically offered at a discounted group rate, and you can even keep the plan long after you leave employment as well, making this a great cost-saving option for you and your loved one.
When it comes to savings, it isn’t necessary for your purchase coverage that will cover 100% of your long-term care costs – just the part that your gross income may not be sufficient to cover. Purchasing the amount of coverage that you only need can save you a significant amount of money in the long run.
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