Long-term care insurance (LTCI) plan design isn't a one-size-fits-all proposition. The policies are as “individual” as you. It can be confusing deciding what benefits you may want when you’re evaluating your need for LTCI by yourself. Where to begin?Many start with the premise that long-term care insurance is too expensive. It sure can be when you look at the rising costs of care in nursing homes. For example, according to Genworth if you live in Manhattan and check out the cost of private nursing home care you'll find the median cost is $450 per day. If you are trying to insure to pay for all of a nursing home stay, the resulting premium can frighten away even the wealthiest New Yorkers.
Think about where you would like to receive care. For most people, the answer to that question is simple- at home for as long as they can stay at home! Because of this, you should start at or just above the average cost of home health care in your desired retirement location. Using the example above, the median home care cost in New York is $21 per hour - or $168 for an 8 hour shift or $13.50 per hour – or $108 for an 8 hour shift in Kansas City.
This doesn't mean you need to call around to facilities and home care services in that area. A firm specializing in long-term care (LTC) planning has access to many current cost of care surveys that provide costs by state and many cities within each state.
In working with a professional, once the average cost of home health care is determined, further customization of your LTCI quote can be done. Some people have recurring income (i.e. pension and/or social security) or other monies they have saved to help pay for LTC expenses – these can be subtracted from the amount of insurance they may plan to buy. Because 40 hours of home health care can cost around half the cost of a stay in a skilled nursing facility, building your plan this way accomplishes a few different things:
- You have a policy design that would pay for most of a long-term care event at home or at an assisted living facility
- You have a policy design that is much more reasonably priced than a policy designed to pay for a nursing facility
- You have the peace of mind that you are buying a policy that can protect you from the risk of a long-term care event
Of course, these policies are “individual” as you – so you can have them designed to pay the maximum available for a nursing home stay. These polices are also underwritten based on your health at the time of application, so it is important to begin planning before something happens with your health.