NEW YORK (7/27/11)--The government’s new long-term care insurance program could be axed as the debt-reduction framework shapes up. But regardless of the decisions being made now, seniors would be wise to consider private long-term coverage (CNNMoney
July 19). The Community Living Assistance Services and Supports Act (CLASS Act) is part of the 2010 health reform law. CLASS was designed to help seniors who need help with daily tasks, most of which are not covered by traditional health insurance or Medicare. No one can be rejected under the plan because of health, and it covers many services that are not eligible for benefits under most long-term-care plans: homemaker services, home modifications, and transportation. But the CLASS Act won’t benefit everyone. Retirees are not eligible. Working people age 18 or older will have to pay premiums for five years to become eligible for a cash benefit of between $50 and $70 a day. Helpful as they are, the CLASS Act benefits are not enough to cover the actual cost of long-term care: Today it costs about $219 a day to stay in a nursing home or $168 for eight hours of care by a home health aide. If the plan survives, CLASS Act premiums are estimated at $125 to $160 a month. They can be as low as $5 a month for those below the poverty line. The $160 estimate is similar to the monthly price of a private long-term-care policy for consumers in their 50s, yet it would provide only about one-third of the daily benefit amount. Private long-term policies offer different benefits than CLASS, so it’s wise to make comparisons. Don’t buy out of fear or emotion. Here’s what to consider before you buy a private long-term care insurance policy:
* Determine how much you can afford. The price of your premiums depends on your age, the coverage you select, and the policy. The average cost of annual premiums for long-term coverage for all age groups was $2,207 in 2007. Insurers have raised rates substantially since then, and are expected to continue to do so. * Decide how much insurance you want to pay for. Consider using regular income to pay for some long-term-care costs, such as supplies and medication, and getting a small policy to cover the rest. Find out now if any family members are willing and able to help with some of your anticipated care needs. * Choose how long you will pay for it. For most policies, you pay premiums until you begin to receive benefits. Some policies let you pay premiums only for a specified period--10, 15, or 20 years. Then your coverage is fully paid up. A few companies give you the choice of paying for the insurance in a lump-sum payment. * Look at all the features. In addition to the daily cost benefits, policies differ in terms of consumer protection provisions, lifetime benefits, lifetime premiums, discounts and other features. * Don’t buy too little. It’s easier to decrease the coverage you have than to add to it, especially if your health declines. * Look at your risk factors and your personal desires about where you want to live. Long-term-care-insurance policies aren’t “one-size-fits-all.” Get one that matches your needs. * Buy coverage when you are younger. For most policies, premiums remain the same each year, unless they are increased for an entire class of policyholders at once. The younger you are when you first buy a policy, the lower your annual premium will be.