July 12, 2016
Long-term Care: Rising Costs and Potential Savings
Not only is long-term care expensive, and getting more expensive, but there is a growing probability that you will need it at some point after turning 65. In 2012, the average cost for a nursing home stay was about $88,000 per year, according to the AARP, while the cost of a home health aide averaged $19,000 for three visits a week, reported the Department of Health and Human Services.
It is estimated that 70 percent of all people will require some form of long-term care at some point after turning 65. On top of that, most health insurance programs—including Medicare—do not cover these costs.
To lighten this burden some people are buying long-term care insurance, but private insurance premiums are rising. New policies have risen between 6 and 17 percent over the past year, primarily because the decline in interest rates which causes insurers to increase premiums.
“The cost of long-term care insurance has risen because claim costs are increasing and interest rates are at historic lows,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “Most affected are policies which contain the five percent inflation growth option; but with inflation so low, there are other options available where costs are surprisingly affordable.”
With many policies paying up to 60 or 70 percent of long-term care cost, the savings could be considerable if you take the time to shop around for more reasonably-priced options. Private long-term care insurance won’t be the right solution for everyone. Your loved one may qualify for Medicaid or a state-funded program if they have a fairly low income and savings, and/or a major disability.
(Read more: The Elder Care Firm)
It is a good approach to buy some coverage with no inflation growth when shopping for long-term care insurance. And even better, would be the same initial benefit with the ability to add to the coverage in the event your health changes.