Should I buy long-term care insurance? | III

If you need long-term care services and have to pay to get them, what financial resources could you turn to? Do you have enough to pay for four or more years of nursing home, assisted living, or home health care?

if you’re over 65, don’t rely on medicare or private health insurance. Medicare doesn’t pay for custodial care, and private health insurance rarely pays for the cost of long-term care.

If you expect to have very little money when you need long-term care services, you may qualify for Medicaid, a government program that pays medical and long-term care expenses for poor people. If you expect to find yourself in that situation, you probably shouldn’t buy long-term care insurance, because your state’s Medicaid program will pay for your long-term care expenses. buying long-term care insurance would only save the state money, not you. The exception is if you live in california, connecticut, indiana or new york, states that have a society for the long-term care program. For residents of these four states, purchasing long-term care insurance offers an additional benefit.

If you expect to have a lot of money when you need long-term care services, you probably shouldn’t buy long-term care insurance either. instead, you should plan to pay for the care “out of pocket,” that is, as a regular expense. a financial adviser suggested in a newspaper interview that if your net worth is in the $1.5 million range, not including the value of your home, you could avoid buying long-term care insurance and deal with long-term care expenses term, if they arise, as you do with your other bills.

If you fall between these two categories, having long-term care insurance, like all other insurance coverage, offers peace of mind as well as financial benefits. for example, a recent survey of people age 50 and older asked how confident they were that they could afford long-term care services if they needed them. among those with long-term care policies, 52 percent said they were very confident and another 40 percent said they were somewhat confident. among those without a long-term care policy, only 8% were very confident and only 27% were somewhat confident.

But if you’re under 85, and especially if you’re under 65, that doesn’t mean you should ignore long-term care insurance because

• You may no longer be able to purchase long-term care insurance. Wakely Consulting Group, an actuarial firm, studied long-term care insurance applicants in 2003-2004; The results: 11% of applicants in their 50s, 19% of those in their 60s, and 43% of those in their 70s were rejected.
• a milliman & The Robertson Actuary estimated that 15 to 25 percent of the 65+ age group cannot receive long-term care insurance.
• a report by henry j. The Kaiser Foundation indicates that more than five million people between the ages of 18 and 64 need some form of long-term care.
• The most recent data from the National Center for Health Statistics (for 1999) reported that approximately 160,000 of those living in nursing homes were under the age of 65 (nearly 10 percent of the total). Of those receiving home health services, approximately 400,000 were under the age of 65 (about 30 percent of the total).

So, unless you have so little money that you qualify for Medicaid, or so much money that you can pay the bills out of pocket, you should consider buying long-term care insurance.