Many of our clients ask whether they should purchase long term care insurance. There is no single correct answer. There are five things everyone should consider.
Medicare does not cover basic nursing home care. The law provides a limited benefit for skilled nursing care after a hospital stay. To qualify, a person must fall within a specific definition. There is a limit of 100 days and co-pays may apply after day 20. Medicaid qualification requires depletion or legal divestment of assets and is not a good way to plan for long term care.
Michigan regulates Long Term Care Insurance by statute (MCL 500.3901). This means that there are certain rules that apply to all policies in Michigan. For example, all policies must cover basic care, because basic care is the most needed care of people who purchase policies. This does not mean that all policies are alike. Some companies include mental illness and alcoholism, some do not. Some restrict pre-existing conditions. Some provide for a full continuum of care and include home care and assisted living care. Because of this, the first thing to understand is exactly what the policy covers. One of the easiest ways to determine this is to ask for the “Summary of Coverage” and compare. Note that the policies are often for a fixed period of years, not for lifetime care.
Cost: The longer you wait to purchase the coverage, the more expensive it will be. In addition, companies do not have to provide coverage and may turn a person down once they develop a medical condition. It is important that you be honest with the company when they ask medical questions. If you are not, this may allow them to decline pay later.
Ask about a company’s insurance rating. All insurance companies are not the same. You should only buy from an established company with an excellent insurance rating. The company needs to be there when it is time to pay benefits.
These policies are still fairly new. If you are a younger individual, it might be a safe risk to wait a few years and see if the cost of the coverage comes down more as more carriers enter the market.
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