The Cost of Not Having Nursing Home or Long Term Care Coverage

The following statistics underscore how important this coverage is. About 70% of individuals who live to age 65 will be in need of some type of living assistance in their lifetime. The average nursing home stay is over two years. You can expect to pay close to $200,000 based on 2010 statistics. 40% of people pay out of their assets for their assisted living and nursing home care. Half of all couples and over two thirds of individuals are impoverished in less than one year after entering a long term care facility.

There are three basic options of paying for nursing home care: The money can come from Medicaid, your investments or other assets, or Long term care insurance coverage. For those with minimal assets, Medicaid pays for nursing home care. The actual numbers vary by state, but generally 50% to 65% of those needing resident care in a long term care facility are receiving assistance from Medicaid. In facilities where Medicaid is the primary source of funds you will find that they (which offers a very low reimbursement rate) generally offer a lower standard of care than privately funded nursing homes.

It should be noted that Medicare Insurance (as opposed to Medicaid) does not pay for assisted living costs. Medicare supplement policies only pay for a limited amount of care after a qualified hospitalization. The most common type of care - custodial - is NOT covered at all! 75% of these costs (as opposed to custodial nursing home expenses) are paid by the the person needing care.

Most people will find it difficult or impossible to pay for an average stay in a nursing home, and still leave enough for a surviving spouse's living expenses and possibly their need for long term care.

Few people are able to save enough money. Only the well-above-average families can afford the cost of even one spouse requiring who needs care in a long term care facility, let alone two. In many cases one spouse becomes ill and needs expensive care, absorbing most or all of the family assets, leaving the remaining spouse in poverty.

Many now recognize the need for Long Term Care insurance coverage both for estate preservation reasons and maintaining as high quality of life as possible for the longest period of time.

Yes, there are some people who will never use Long Term Care insurance – about 30%. Even so, the average long-term care insurance contract purchased by a 65-year-old and held until death pays out 82 cents for every dollar of paid.

Because Long Term Care contracts are not standardized and there are such a wide variety of options available for coverage, it is a good idea to get as much information about these policies before buying one. A broker who specializes in long term care will know which riders each insured needs, and be able to able to give you good advice. A long term care insurance agent is the best resource to compare contracts, coverage, and endorsements. A good broker can make sure the plan you buy is the appropriate policy for the individual situation.