How to Get Good Long-Term Care Coverage
With the industry in turmoil, here's what to look for in a policy
Medicare doesn’t pay for custodial care and will only pay for nursing-home stays in limited, short-term circumstances. Medicaid pays basic long-term care expenses, but only for those who have exhausted their assets. What’s more, that government program is already under strain and shouldn’t be considered a fallback even for those who meet its stringent criteria, experts say.(MORE: Why Long-Term Care in the U.S. is Headed for a Crisis and What We Can Do)
What this all means is that most of us will need help toward the end of our lives and most of us will be on our own paying for that help, if we don’t have family or friends to do the work for us. And many financial advisers say relying on family shouldn’t be the sole plan for our old age.
Few Own a Long-Term Care PolicySo what are we doing to prepare for this eventuality? Only 7.4 million Americans are covered by a long-term care insurance policy.
Yes, long-term care insurance suffers from a bit of an image problem — as well as from some serious business challenges. Some carriers have exited the business in recent years. Many of the insurers that remain have started levying rate increases of more than 50 percent on their existing customers and reducing benefits for policyholders who opt not to pay those increases; charging women more than men for individual policies and trimming benefits on their newest policies.And yet there’s some good news for those considering a policy.
“The likelihood of rates going up on policies issued today is as close to zero as possible,” said Jim Glickman, president and CEO of LifeCare Assurance Company, a long-term care reinsurer and administrator, and a fellow of the Society of Actuaries. That’s because companies are pricing their new policies with much more conservative assumptions than those that informed prices in decades past.