Here’s one rate that hasn’t dropped. The 2009 Long-Term Care Insurance Price Index — published by the American Association for Long-Term Care Insurance (www.AALTCI.org) — shows that costs for coverage have increased about 2 percent compared to a year ago. For the full report, CLICK HERE.
What is long-term care insurance? It covers expenses that health insurance and Medicare typically do not, including the cost of a nursing home or home care if you need help like feeding, dressing or bathing yourself.
The cost for long-term care insurance is closely tied to interest rates that have significantly declined in recent years.
“Investment income comprises between 40 and 60 percent of the dollars used to pay eventual long-term care claims,” said Jesse Slome, executive director of the trade organization that conducted the research. “Premiums paid by policyholders make up the other portion and as interest rates have declined, insurers have found it necessary to raise premiums for protection.”
The industry paid out $5.8 billion in claims in 2008 to some 180,000 policyholders.
The index published annually measures costs for top-selling long-term care insurance policies that offer consumers approximately $115,000 in current benefits, with protection increasing yearly as the individual ages.
The survey compared costs for individuals age 55 with those age 65. “A married individual purchasing $172,000 in current protection will pay about $20 a week ($1,084-per-year) by qualifying for available good health discounts,” Slome explains. “By waiting until they are age 65, they’ll likely pay $63-a-week because they will need to buy more coverage to keep pace with inflation and will likely no longer qualify for the good health savings.
Does that mean you should buy now? Not necessarily.
For one thing, not everyone needs or can afford long-term care coverage. If you don’t have much income or assets, your expenses could be paid by Medicaid, which covers such costs for the poor. If you have millions and aren’t worried about protecting your kids’ inheritance, you can self-insure.
Those in between these extremes should at least explore the option of buying some coverage, usually between their mid-50s and mid-60s. For more information, visit AARP’s excellent long-term care site by CLICKING HERE.
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