Preparing to live in a nursing home and planning to move a loved one to an assisted living facility are among some of the most stressful life events. The reality is that almost 1.5 million Americans live in nursing homes today and spend over $83,000 per year, on average, for a private room. But the good news is that quality nursing home insurance puts you in control of what's ahead instead of leaving you at the mercy of Medicare or Medicaid benefits. It also enables you to receive the care you need without having to deplete personal savings or your parents' savings. Additionally, it allows elderly family members to avoid handing off the financial burden of care to their children.
Nursing home facilities cost about $83,000 a year on average. That's over $227 a day. Although Medicare or Medicaid benefit plans may pay a portion of that, you'll still have to spend money out of your pocket for a large part of your nursing home expenses.
So what exactly is nursing home insurance converage? In a nutshell, it is a type of healthcare coverage that covers nursing home, assisted living, skilled nursing, custodial care and in-home care for people who are 65 or older. There are also policies that will cover you under the age of 65. This includes the cost to live in the facility and the cost of the care you receive. For example, a private room and skilled nursing care costs more than a semi-private room with just custodial care.
Normally, a private nursing home insurance policy, also known as a long term care policy, pays $100 to $500 of your daily expenses. Of course, the amount depends on the type of nursing home coverage you carry. Coverage is guaranteed as long as you pay your premiums.
What is the cost of adequate nursing home insurance? Long term nursing home insurance costs around $3,000 a year if you are 65 when you set it up, and the rates increase steadily as you age. It is significantly less expensive if you start the policy when you are younger. Here is a breakdown of how your premium costs may vary based on age and coverage limits.
No matter what your age is now, getting started right away is the key to lowering nursing home insurance costs. Also, keep in mind that nursing home insurance coverage can vary widely based on your daily costs and your benefit period. In addition to the benefits listed above, you may also be interested in considering factors such as private or semi-private rooms, joint coverage with spouse, location of care and annual premiums.
Most people find that the benefits of nursing home insurance plans far outweigh the costs. By the time you are 65 or older, there is a 68 percent chance you will need some type of long term nursing home care. When you consider that you can pay $1,300 to $3,000 a year now, or $55,000 per year later, the cost of nursing home insurance may seem worth it. Even if you start at age 40, you only pay a total of $32,500 for an inflation-adjusted benefit of $750,000 by the time you are 65.
Also, time is of the essence as the American Association for Long Term Care Insurance estimates that you have a 14 percent chance of being turned down for long term care insurance in your 50’s, and a a 25 percent chance of being turned down in your 60’s.
If you simply cannot afford an inflation-adjusted policy, you can still purchase less expensive coverage. It's much better to have some coverage than no coverage at all. Here are a few ways to reduce the cost of your premium if you think you can't afford nursing home care.
Nursing home insurance policies are fairly complex. They take into account many different variables that are unique to each consumer. When you're considering this kind of coverage, there are a few steps you should take to make sure you're getting what you need:
If you follow these steps, you'll have an easier time getting a full picture of your needs, the costs, and the options in the marketplace that can work for you.