Race To Retirement
People are living longer, thanks to advances in medicine and
healthier living habits. The bad news: At some point age will
take its toll.
More than two-thirds of individuals turning 65 will eventually
need assistance for such daily, basic activities as bathing and
dressing, studies say.
Medicare and private health insurance don't usually pay for
"Medicare pays very little long-term care and only for short
periods of time, typically about 20 days," said Jesse Slome,
executive director of the American Association for Long-Term Care
Most government and private insurance payments go toward
medical expenses that help improve your health outcome, typically
after a hospital stay.
If insurance won't pay, who will? Relatives often step up to
the plate. But that can be taxing on them.
You can pay for help yourself. That can be expensive,
especially if care drags on for years
. Homecare typically costs around $30,000 a year and nursing
homes $84,000 a year for a semi-private room.
If you've exhausted all your resources, Medicaid will cover
nursing-home costs. That's not usually an option for people with
Another option: Buy long-term care insurance. Almost all
policies allow benefits to be used in various settings, including
at home, an assisted living facility or nursing home. Many
policies also cover some homemaker services such as meals or
housekeeping, as long as they're in conjunction with
Premiums are based on your age when you apply, and don't
usually go up because of age. Even more important is your health.
You have to be relatively healthy to qualify.
"Not everybody can get long-term care insurance," Slome said.
"The older you are, the more likely you will have health
conditions that will preclude you from qualifying."
He says the "sweet spot" for applying is between 55 and
How much coverage should you get? "Most people think it's an
all-or-nothing proposition. But there are enormous options and
flexibility to customize insurance protection to meet every
conceivable situation," said Slome, who advises to shop
Slome suggests contacting an insurance agent who knows the
ropes: a specialist who has written at least 100 long-term care
policies and is "appointed" with four to six insurance companies.
(For agents in your area, contact aaltci.org.)
Many insurers have exited the business the last few years due
to profit pressures. The top-five policy writers accounted for
76% of the market in 2012, according to Limra Insurance Research.
The top five:Genworth Financial (
), John Hancock, Mutual of Omaha, Northwestern LTC and
If money is an issue, Slome advises to buy at least some
coverage to defray costs. Individual policies for women, who live
longer than men, may cost 20% to 40% more than for men, Slome
says. But for couples, "it works out the same." Most policies are
bought by couples.
According to AALTCI's 2014 National Long-Term Care Insurance
Price Index, the premium for a "good," or basic, policy for a
couple in standard health costs $1,795 a year at age 55. The same
policy goes up to $1,980 at 60 and $3,620 at 65.
With that policy, each spouse would receive up to $164,000 in
benefits starting at age 60, if needed. "Better" and "best"
protection would cost more, but benefits would increase with
For example, the "best" coverage would cost $3,840 for a
couple applying at 60, but the value of protection would increase
from $164,000 each at 60 to $650,000 at 80 and $730,000 at
Most long-term care policies are stand-alone products and tax
qualified, meaning premiums enjoy some tax benefits, mostly after
Tax-qualified coverage applies to individuals who are unable
to perform at least two of six basic functions: bathing,
transferring, eating, dressing, continence and toileting.