Comparing the Different Types of Long Term Care Insurance Policies
The value of long term care services is soaring every year. Longevity as a result of medical advancements and lifestyle changes can be factors on why retirees are expected to spend more. Inflation also plays a big part in long term care and retirement expenses, when prices may shoot up at any given notice. Which is why learning more about the different types of long term care insurance may just be the thing to secure a retiree’s future.
Besides paying out of your own savings, you can consider purchasing long term care insurance (LTCI) to help cover for costly future expenses. There are different types of long term care insurance policies, and these types differ in terms of costs and pay out procedures. However, all provide comprehensive coverage for LTC needs in home health care and specialized care facilities. Understanding how a type works may help you decide which option will best suit your needs.
Types of Long Term Care Insurance
With this type, you will receive the exact amount of the daily benefit, regardless of the total amount of long term care services received for one day. The freedom to spend the excess money is entirely up to the policyholder. If you want to use the money to pay for other bills or to pay for school expenses of your children, you can do so. For example, your daily benefit amount is $500 and your facility bill is only $250. You will receive the full $500. The $250 will go for the long term care services received and the other half will go directly to your pocket. You can use it whenever and wherever.
This plan is a joint project of private insurance companies and the government. It provides cheaper monthly premiums to policyholders so that they can purchase and own private long term care insurance. This type of long term care policy has two features – the dollar for dollar asset protection and the second, reciprocity feature. In the event you have exhausted all your LTC policy benefits, you can easily apply for Medicaid. Medicaid will then disregard, dollar for dollar, assets equal to the amount of benefits provided by the partnership policy. Partnership policies also depend on the beneficiary’s current state of residence. If you plan to pursue this type of LTCI, please make sure to confirm first with an LTC specialist if a partnership program currently exists in your state.
Among other types of long term care policies, this is the most common policy option. Aside from it being the most common option, this policy is also easy to comprehend because you get reimbursed for the exact amount you spent on long term care services. For example, you have a monthly benefit of $2000 and facility bill is $1500. Your insurance provider will pay you $1500 for the long term care services you received and the remaining $500 will go to your benefit amount pool. On the other hand, if you go beyond your benefit amount, you are responsible to pay for the excess amount of long term care services.
Aside from the different types of long term care insurance policies, these other tips can assure you of practical and cost-efficient means to pay for possible LTC expenses.
Adding a Policy Rider
Once you buy a long term care insurance policy, your insurance provider will ask you if you want a rider attached to your plan. One such rider is inflation protection. The inflation protection rider is encouraged by financial advisers and long term care experts because this option will protect your plan against the rising cost of care. Although an insurance rider may increase premiums to be paid, the savings one gain from inflation will secure hard-earned cash from being spent on miscellaneous expenses. Remember, what is considered insignificant today may be valued at a much higher price in the future. Additionally, make sure to check with your LTC specialist on if policy riders are available for your policy and if you are eligible to apply for one.
Retirement does not mean the end of one being able to earn money. Consider online jobs. Technology nowadays allows individuals to earn money in the comfort of their homes.
Keeping fit will allow one to avoid additional medical bills from piling up. When it comes to being healthy, simple exercises such as brisk walking or stretches and sticking to a healthy diet go a long way.
There are three types of long term care insurance policies – indemnity, reimbursement, and partnership policies. Each has its own advantages and disadvantages. Make sure to take the time to discuss with an LTC agent on what type of long term care policy you prefer to buy. Doing so will give you the peace of mind that you will get the care and assistance you deserve during your golden years. Additionally, the last few tips (inflation rider, online work, and physical exercises) will help you in the long run. LTC expenses may increase, but that doesn’t mean will not have the means to be able to pay for premiums and other expenses.