Covering the Cost of Long-Term Health Care
Healthcare Insurance can be a cushion -- if you're careful
The popularity of LTC insurance policies has grown since they appeared in the 1980s -- more than 8 million people now have individual or group coverage -- but consumer advocates and insurance regulators caution that such coverage is not a good buy for everyone. LTC policies remain confusing, they say, and the terms and features vary widely, from when benefits start and the maximum daily payout to how long benefits last and what services are covered. State insurance regulators field a steady stream of complaints from consumers over issues such as unexpected premium increases and denial of coverage.
To fend off such unpleasant surprises, which may surface far into the future, experts stress that consumers must understand the details of what they are buying and bring a sharp eye to policies under consideration.
A deciding whether to buy at all is something of an educated guess. Are you pretty confident you could handle the cost of long-term care on your own if you needed it? Assisted-living facilities in some parts of the country charge
Premiums can be made more affordable by altering such factors as the timing and scope of coverage. A 90-day "elimination period," for example -- the time that must pass before benefits kick in -- would carry a far lower premium than if the policy started paying out as soon as you were eligible.
Economizing by passing up inflation protection is a bad idea, say experts. It's the only way to hedge against hikes in healthcare costs, which have been averaging 4 percent a year. An inflation rider may tie benefit increases to the consumer price index, or it may add a fixed sum (simple protection) or a fixed percentage (compound protection) each year. A 5 percent compound rider is the industry standard, says
Choose wisely. Before weighing the pros and cons of different policies, the soundness of the companies selling them should be determined.
Because of the wide variations among LTC policies marketed by different insurers, says
In the 20 years since the Krumpotiches bought long-term-care insurance, LTC policies have broadened their scope. Most now offer comprehensive coverage for care whether provided in a nursing home, in an assisted-living facility, or at home.
The policies also have become more flexible. Many insurers will pay for services that are recommended by a physician even if they are not specifically named in the policy. More insurers also offer cash-benefit policies, which make regular payments directly to policy holders after they become eligible to receive benefits, without requiring reimbursement approval. This option would add about 30 percent to the premium, Slome says. But it would allow you to purchase monitoring devices or a specially rigged computer, perhaps, that would make your life easier. Or if family members are involved in your care, the cash could be paid to them for the time, perhaps even for the jobs, that they are giving up.
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Covering the Cost of Long-Term Health Care | Megan Johnson
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