Long Term Care Insurance

admin — Wed, 30 Jul 2008 11:07:52 +0000

This is a new health insurance coverage, when compared to the others we have reviewed. Its purpose is to provide money and/or options when someone needs long term care. Options might include care in the home, day care facility, training for the caregiver, and all the way to care in a facility on a full time basis. There are many companies selling Long Term Care (LTC) products but most have the same options. Currently, people who have limited income and assets have long term care paid by Medicaid. Medicaid is not Medicare. Medicare provides almost no benefits for long term care. Medicaid is a program run by each individual state to help provide care for low income people. I am not sure how long states can or will continue to pay for long term care because it’s a huge part of the budget. What else can they do? I don’t know, but there is only so much money available and at some point they will have to decide who gets benefits and who does not. I do know it will only get tougher to qualify for Medicaid to pay for long term care.
Daily Benefit: You will want to find out the daily rate charged by local facilities by calling a couple of the long term care facilities in your area to ask what the current daily rates are. I would then consider buying about 80-90% of the average. Why not 100%? Most people in these facilities are on Social Security and will continue to receive those payments. Use your Social Security and or pension income to offset the remaining 10-20%.
Length of Benefit: You can choose from 1 year all the way up to lifetime (no limit), but the cost goes up greatly for extending the benefit length. The average stay is about 2x/i years, so use this information along with what your budget allows to pick your benefit.
Elimination period: Most companies offer from 30 day to 180 day elimination periods. Do you have some money in the bank or income that could help pay for the first few months of care? If you do, then choose the longer elimination periods and your premium will be less.
Inflation Rider: This coverage increases your daily benefit by a certain percentage each year. It can either be a compound increase or a simple increase. The compound increase costs more because the benefit increase is based on the prior year benefit. A simple increase will always increase the benefit by the percentage of the original daily benefit. I like the simple benefit because I believe competition will help keep prices in check for long term care, so the simple benefit increase should be sufficient. The simple increase benefit also costs much less.
With the four options listed so far, you can have great flexibility in price. Play around with different coverage and find the one that makes best sense to you.

What if you are not eligible to have a HSA?

admin — Wed, 30 Jul 2008 11:04:19 +0000

The same principle of taking the highest deductible you can afford applies. Like all insurance, you pay more for lower deductibles than they are worth because from the insurance company standpoint, lower deductible claims have many of the same costs as higher deductible claims (paper work, computer time, and so on). Almost all plans have some deductible you pay first, and then you and the insurance company share the cost (coinsurance) at a specific rate. The company might pay 80% while you pay 20%. There is also usually a stop-loss or maximum out-of-pocket limit for you each year. This maximum will be for each individual insured, or for all insured family members, or both. The last common factor in health insurance is the lifetime or annual maximum the insurance company will pay. I have seen this as small as $250,000 and as big as unlimited, although most are between 1 and 8 million dollars for lifetime now I wouldn’t go for anything less than 1 million, but be sure to check the cost and determine the best value for you.
HMO, PPO or Traditional Health plans: HMOs have gotten a bad rap. They are a way to limit health care cost by limiting your choices to within a network. Doctors and hospitals in thsr network have agreed to charge a lesser amount for many procedures. The care you get within the network is probably just as good as you get from anywhere. The problem is people feel trapped in HMOs, and if that is the case, even a lower price might not entice them to join.
The traditional health insurance plans let you choose whatever doctor or care facility you want. Along with this freedom of choice comes the most expensive premium. Many times I have seen traditional plans cost double what a HMO plan cost.
The PPO (Preferred Provider Organization) is a mix of the other two. Ifou can go to any doctor or facility you want, but if you go to one outside of the PPO you will have to pay additional deductibles or coinsurance rates.
A benefit some plans are offering is wellness care. They pay for you to have a physical every couple of years. These physicals help reduce future claims by identifying potential problems (high blood pressure, cholesterol, diabetes…). Some even offer discounts at local health clubs. What a great idea! Lower health cost by lowering the chances of problems. If these benefits are available, be sure to take advantage of them.

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Long Term Care Insurance

What if you are not eligible to have a HSA?