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Ten Building Blocks
to Success:
1. Starting a Business
2. Financing a business
3. Company Name
4. Office Equipment
5. Hiring
6. Business Insurance
7. Advertising
8. Efficiency
9. Pension Plans
10. Succession Plans
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Long Term Care Insurance
As we get older we start to hear friends and relatives talk about someone they know who is in a nursing home and how expensive it can be to stay there. The discussion then progresses to how expensive a Nursing Home insurance policy can be. Both are true.
The purpose of this page is to shed some light on the whole process and make some recommendations.
Most people think that you need a Long Term Care policy to pay to stay in a Nursing Home. This is NOT true. There's actually three ways to pay:
(1) Be Rich. Pay with your own money.
(2) Be Poor.
Go on Title 19 (welfare).
(3) Be
insured. Buy a Long Term Care Policy.
We can't control the first two so we'll discuss the Long Term Care Policy.
The Facts
Fact #1: One in two people will spend some time in a Nursing Home.
Fact #2: The average stay in a Nursing Home is 2.5 years.
Fact #3: Medicare will cover a small part of a Nursing Home stay.
Fact #4: Your medical insurance policy will NOT cover a Nursing Home stay.
Features of a Long Term Care Policy
Daily Benefit:
The cost to stay in a Nursing Home varies by city and
state. In some parts of California and New York
the daily rate is as
high as $385. Check to see what local nursing homes charge per day.
Waiting Period:
Benefits are paid after a waiting period, typically 20 days
or 100 days.
Benefit Period:
How long benefits are paid, typically 2,3,4,5,6, 10-years or
lifetime (unlimited).
Inflation Option:
benefits increase every year by either a fixed amount per day
or compounded increases at an interest rate such as 5%.
Discounts:
Typically there are two discounts: (a) Good Health Discount
can be up to 10% and
(b) Spousal Discount of up to 25% if both spouses apply.
What's covered:
Skilled, Intermediate and custodial case in a nursing home
Home health aides
Chore services
Homemaker services
Adult day care
Private duty nursing
Hospice care
How do you qualify for coverage one of two ways:
(1) You need help with at least two of six activities
of daily living. The six activities are:
Bathing
Dressing
Toileting
Continence
Transferring
Eating
(2) You require help due to cognitive impairment.
Tax Deductions for Qualified Long Term Care premiums in 2008:
Premium
Age
Deduction
40 and under
$310
Age 41 - 50
$580
Age 51 - 60
$1,150
Age 61 - 70
$3,080
Age 70 and
over
$3,850
The "Lookback" period:
Without a Long Term Care policy a Nursing homes will ask
you to spend down your assets before you're eligible for Medicaid.
They will "look back" at all of your assets for the last
five years. You must "spend down" those assets, even if you no
longer have them. Even if they were gifted away.
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