Selecting the Best Long Term Care Policy for You

Suzanna de Baca -- Expert Business Source, 4/9/2007 7:02:00 AM

How many of you have had a parent, grandparent, relative or friend that required long-term care or nursing home care?According to U.S. Census Bureau, Decennial Census Data and Population Projections, there are currently more than 35 million people in the U.S. are over age 65, and in 2011 the 77 million Baby Boomers will begin turning 65.

Considering this wave of individuals potentially requiring care, it is a smart move to line up long term care coverage now to offset the cost of elder care that may be very competitive in the future.

What are the factors you should consider when looking at a long-term care policy?Cost is only one criteria a savvy consumer should compare.Here are five important features you should investigate when looking at long-term care policies.

1. Activities of Daily Living:Long-term care is assistance provided to people who have a prolonged condition or illness that limits their ability to perform normal daily activities. There are six activities of daily living:bathing, eating, dressing, toileting, transferring and continence.The fewer compromised ADLs that a policy requires, the better for you, the consumer.Look for a policy that states coverage will be triggered by the inability to perform two or more ADLS.
2. Location of Care:In the future, experts predict that there will be more home care services available.Look for a policy that covers care in the home, in a nursing home, or in a hospital.
4. Inflation: Healthcare costs have been growing at twice the rate of the consumer price index, states a 2004 article published by LOMA, an international organization that provides research to the insurance industry. (1) That research indicates that analysts predict that the cost of long-term care will grow five percent annually, doubling by 2018, and doubling again by 2033. In light of these expectations, consider a policy where you can select a cost of living adjustment rather than having today’s dollars not be sufficient for your care in the future.
5. Indemnity vs. Reimbursement:Do you want to be reimbursed for the cost of care you require or would you rather be paid the total amount of your coverage?For example, under a reimbursement scenario, if you purchase coverage of $150/day but you only spent $100 during one day, you would only be reimbursed $100.By selecting indemnity, you may pay more, but you would receive the full amount of coverage.
6. Issuer:As always when purchasing insurance or any financial service, consider the health of the company.Look at the company rating and investigate their ability to pay claims in full and on time.The last thing you need when you require long-term care is for your insurance company to be in worse health than you.