The price range can be huge depending on where you live.

admin — Thu, 31 Jul 2008 07:13:27 +0000

The average cost of a private room in a nursing home is now $203 per day (almost $75,000 per year) throughout the United States, according to the MetLife Mature Market Institute, but the price varies enormously from city to city. The average daily cost is just $135 in Birmingham, Alabama, and up to $348 in Stamford, Connecticut. That adds up to a big difference over just one year - totaling nearly $50,000 in Birmingham or more than $125,000 in Stamford (see Figure 6.1).
The price can also vary a lot within one city. There are high-quality and lower-quality nursing homes everywhere, which can have a big difference in price. It might feel strange, but it’s a good idea to contact a nursing home or two where you wouldn’t mind living someday just to get an idea of how much a high-quality nursing home costs in your area.
You may want to boost your benefit amount even higher if you’re interested in receiving care in your home, which most people are. The average hourly rate for a home health aide is $19, according to the MetLife Mature Market Institute. Even if you don’t require 24-hour care, the cost can easily top the price tag for a nursing home. In fact, quite a few people in nursing homes may have preferred to get care in their homes, but couldn’t afford the extra cost.
All good long-term care policies now provide at least as much coverage for home care as they do for nursing-home care. If you have an old policy, however, you may want to upgrade it to a newer version. Many policies purchased in the mid-1990s only covered home care at 50 percent of the rate of nursing-home care, which could leave you with too little money to choose that option. If your home-care coverage isn’t enough, contact your LTC insurance company and find out how much it would cost to upgrade to a newer version. If you stay with your current company, the added cost will probably be a lot less than it would with another insurer.

Myth About LTC

admin — Thu, 31 Jul 2008 07:07:11 +0000

Some old rules of thumb say that you don’t need long-term care insurance if you have more than $1 million in assets because you can afford to pay the bills from your own pocket.
That’s a mistake.
First of all, $1 million won’t get you very far at today’s nursing-home prices, and will cover even less in the future. Remember, the nearly $75,000 per year in average costs today will top $250,000 in 25 years if prices continue to rise by about 5 percent per year. It’s tough to imagine that even happening. Hopefully some changes will be made by then to help make the care more affordable, but you still don’t want to get stuck with the possibility that you’ll have to cover all of those bills yourself.
Most important, if you think you can afford potential long-term care costs, then you can definitely afford the premiums for the insurance instead. What sounds worse: $3,000 per year for insurance or more than $75,000 per year for care?
Buying long-term care insurance lets you shift some of the risk to the insurance company. You give them a set premium each year (which may go up a bit through time, but hopefully won’t) and in return they cover a potentially giant, unknown expense. It’s the same way that rich people still buy insurance on their health, cars, and homes even though they could afford to pay the bills themselves.
You may never end up needing long-term care, but if you know those costs are covered, you can afford to spend more money on retirement without having to worry about setting aside a big pot of money to pay for the potential expenses.
The opposite, however, is not true. If you can’t afford long-term care premiums, or don’t think you can keep up the payments through time, don’t buy a policy. The worst move is to buy a policy, pay the premiums for years, and then have to drop it when you get older - right at the time when you’re likely to need the coverage the most. If you drop the coverage before you need care, you’ll get nothing in return, even if you’ve paid premiums for years. If you don’t have much money to begin with, and understand the limitations on Medicaid coverage, at least you know that the government program can help pay some of the bills.

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The price range can be huge depending on where you live.

Myth About LTC