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Years from now, you may need help performing basic tasks like dressing, bathing or eating. Regular health insurance, including Medicare, doesn’t pay for assistance with “custodial care,” except in limited circumstances.
Long-term care insurance does, but it can be expensive. Here’s how to keep the price affordable.
1. Buy sooner rather than later
Long-term care insurance is less expensive if you apply early. You can buy a policy up to age 75 from most companies, but you’ll pay more at older ages and if you have health conditions.
The ideal age to start shopping is in your mid-50s, according to the American Association for Long-Term Care Insurance.
But don’t give up if you’ve passed that milestone. Apply 30 to 60 days before your next birthday to get a price based on your current age.
2. Work with an independent agent
Prices vary by insurer for the same amount of coverage. Work with an agent who can sell — not just quote — policies from different carriers. A good agent will know which companies will likely accept you for coverage based on your health and give you the lowest price.
Get price comparisons even if you’re offered the opportunity to buy long-term care insurance through a group, such as your employer. If you’re healthy, you might find a better deal on your own.
3. Settle on a budget
Decide what you’re comfortable spending for coverage and ask the insurance agent for quotes that fit your budget. As with any type of insurance, it's important to buy a policy you can afford in order to avoid running the risk of letting your coverage lapse.
Work with a financial advisor to review other options if you can’t qualify or pay for long-term care insurance. Medicaid — the federal and state insurance program for people with low incomes — will pay for nursing home care, but to qualify, you have to spend down most of your money first.
Compare Medigap plans
4. Plan realistically
More than half of Americans who turn 65 between 2021 and 2025 are likely to need long-term care services, according to a 2022 data from the U.S. Department of Health and Human Services and the Urban Institute, a research nonprofit. Those who pay for long-term care can expect the average lifetime cost to reach more than $245,000, with much of it spent on nursing home care.
But few want to think about that.
Instead of focusing on the dreaded nursing home, consider buying enough coverage to pay for home health care for a few years.
Most long-term care is provided at home by unpaid family members and friends, according to the National Institute on Aging. And most long-term care insurance policies reimburse you for care at home or in assisted living or a nursing home. So if you buy enough to pay for home health care but instead go to a nursing home, the policy will pay at least some of the nursing home costs.
Look at costs of care in your area to estimate how much coverage to buy. Nationally, the average annual cost of a full-time home health aide is $61,776, compared with $94,900 for a semiprivate nursing home room, the Genworth 2021 Cost of Care Survey found.
5. Go for a simple vs. souped-up policy
Ask for quotes for good, better and best coverage from each company to see costs at different levels. Avoid adding features, called riders, that you don’t need.
An example is a “restoration of benefits” rider: If you need long-term care and then get better, the benefits you used are restored for a later date. But once people start to need long-term care, they usually continue to need it.
An inflation protection rider allows your benefits to grow to keep up with inflation. Reducing the inflation protection from, say, 3% to 1% will drop the policy price. If you’re older — 70 instead of 55, for example — you may be able to get by with less inflation protection.
A final thought
Avoid an all-or-nothing approach when buying long-term care insurance.
People sometimes want to buy enough coverage to pay 100% of the cost of long-term care, but that may not be necessary. Instead, think about the costs you can handle — and don’t buy more than you need.