A number of surveys show that many people are unprepared for the cost of a prolonged illness, especially in their senior years.
Not enough folks are buying long-term-care insurance, which can cover the cost of nursing homes, assisted-living facilities and in-home care. It also covers expenses for those who need assistance with daily activities or have a severe cognitive impairment such as Alzheimer’s disease.
A new survey released by America’s Health Insurance Plans found one in four baby boomers assumes they have coverage for long-term care expenses when, in fact, they don’t. People think Medicare pays for it.
Generally, it doesn’t.
Medicare pays for a stay in a nursing facility or for home health care. To get that coverage, you have to meet certain conditions.
Medicare doesn’t pay for custodial care, which involves helping someone with daily activities. Medicaid, the state and federal health insurance program for the needy, provides long-term care coverage but you have to spend down to the poverty level to qualify for coverage.
Even those who have insurance aren’t always sure how long to carry it.
I recently received the following e-mail from a reader. She wrote: “I am a 72-year-old woman still working but currently on medical leave due to a corneal transplant. Should I continue paying for the long-term-care insurance I started a few years ago?” The reason she was asking? This is expensive insurance. The policy for the woman is $1,788 a year.
Prices for such insurance vary widely. But given the reader’s age and the fact that her policy is in place, she should continue her coverage, says Ernest Burley of Burley Insurance and Financial Services in Maryland.
Here’s why, Burley said:
Another option is for the woman to contact her insurer and see if she can scale back coverage.
Kiplinger’s Personal Finance magazine recently launched a new sec- tion on its website (kiplinger.com /yourretirement/longterm) devoted completely to long-term-care insurance. The site includes a seven-part video that was underwritten by John Hancock Life Insurance Co. but written and produced by Kiplinger editors.
Like buying most insurance, this isn’t a pleasant task – but one you should start thinking about as part of your retirement plan.
