Playing the Odds When You’re 65

Playing the Odds When You’re 65

Age insurance: Premiums are expensive, and benefits could be a long way away

If you’re 65, there’s slightly more than a 60 percent chance you’ll never collect anything from a long-term care policy. There’s a 75 percent chance that you’ll need care for less than a year, and chances are, you will have the resources to pay for it. On the other hand, there’s a chance that you or your spouse will need nursing care for five years or more. That bill could wipe you out.

Even so, long-term care coverage is expensive, and policies are often full of loopholes that allow insurers to avoid paying claims. No wonder few people over 65 have ponied up.

Long-term care insurance isn’t for everybody. In fact, it isn’t for most people. This kind of insurance only makes sense for people who have assets to protect, specifically those whose net worth, excluding their house, is roughly between $100,000 and $1 million. With less, you’re denying yourself Medicaid assistance that you would be entitled to if you had no insurance. If your assets are above that range, you’d probably be better off saving the money you would pay in premiums and being prepared to pay for any care out of your savings.

Age Insurance. Photo by Elena

The best time to buy a long-term care policy is probably when you`re in your 60s, before premiums skyrocket. But you`ve got to be prepared for the long haul. The average age for nursing home admittance is 81 for men and 84 for women. Here we cite factors to consider when buying a policy:

What’s covered: Some companies will only dole out money for medical problems. Experts recommend a company that provides more than medical attention, such as assistance with bathing, dressing, eating, moving, going to the bathroom, or in the case of Alzheimer’s, constant supervision.

Home care; Many people would prefer to avoid nursing homes. Insurance companies have begun offering limited care outside of institutions.

However, most polices only pay a flat dollar amount per day, which may only cover a few hours of care.

Benefit amount: Check out the costs of nursing homes in your area to determine the appropriate daily benefits. For example, if they charge $125 a day, you might want to insure yourself for $110 a day and cover the remainder from your own income.

Benefit period: The majority of nursing home stays are less than three or four years, so you may want to park your premium by changing a shorter time period.

Elimination period: This is your deductible, measured in the number of days of care you pay for before the insurance company kicks in its share. Experts recommend 20 to 100 days.

Inflation protection: For buyers under age 70, experts recommend purchasing a policy that increases your benefit amount by 5 percent each year.

Otherwise your fixed daily benefit could shrink in proportion to the real cost of care over the years.

Average age of admission to a nursing home: men – 81 years old, women – 84 years old.

Who will care for you if are disables you: Spouse – 35.6%, daughter – 32.6%. Son – 17.1%. Other – 14.7%.

What are your chances of a nursing home stay? Length of stay, at least one day, men – 33%, women – 52%. 3 months or more, men 22%, women 41%.

1 year or more, men 14%, women – 31%. More than 5 years. Men – 4%, women – 13%.

Who pays for nursing home care? Medicaid – 47.4%. Private pay – 43.1%. Medicare – 4.4.%. Other – 5.1%.