Tips to Cut Your Long Term Care Insurance Premiums
By Shane Flait ©2008

Long term care (LTC) will affect 3 out of 4 seniors. Paying directly for the LTC costs can be financially devastatingly. If you have very few assets, Medicaid will pick up your LTC costs. But those who have perhaps $75,000 or more may easily deplete them paying directly for LTC. And if you apply for Medicaid, then Medicaid will deplete them before picking up the costs for free.  

But you can opt for LTC insurance. Although the cost of LTC insurance may be more than $3,000 per person per year, this is significantly less than paying directly for long term care at $80,000 per year[1] or more.

To preserve your assets, you should consider buying LTC insurance if you:

·         Own assets of at least $75,000 (excluding home and automobile)

·         Have annual retirement income of at least $25,000–$35,000

·         Can pay premiums without adversely affecting your lifestyle

·         Can absorb possible premium increases without financial difficulty

You can minimize your LTC insurance premiums try to include in your policy:

·         Level Premiums: Most all long-term care insurance companies currently reserve the right to raise their rates in your state on a class (not individual) basis. That means they can raise the rates on all policyholders with your policy form, if your state insurance department approves the increase.

·         Skilled nursing care and custodial care in a nursing home, or at home, without any restrictions on previous care. You don't want a policy that requires you to be hospitalized before the insurer will cover nursing home stays, or prior skilled nursing-home care before they'll pay for custodial care.

·         Assistance with as few as two "activities of daily living" (ADLs). These include needing help with bathing, dressing, eating, toileting, transferring, or because of incontinence.

·         A daily benefit amount that's lower than the daily cost of nursing-home care in your or your parents' area. So, if the average nursing home costs $150/day, purchase a $125/day benefit and make up the $25/day difference yourself to help save on premiums.

·         Inflation protection that automatically increases your initial benefit level annually at least 5%.

·         A four- to six-year cumulative benefit period rather than lifetime benefits.

·         A 90-day or more "elimination" period (which is the waiting period between when you enter a nursing home and when your benefits begin).

Additional strategy for lowering LTC premiums:
Realize too, that premiums costs decrease the earlier you purchase the policy. And they depend on how long your LTC care duration will be – for as long as you live or for a shorter duration choice. 

So a possible option to consider is a 3 year duration policy since – statistically - most people are not in a nursing home for more than 3 years. And consider where your nursing home will be since some states are more expensive than others for determining your daily cost of nursing-home care.

Perhaps a short, fat policy – a 3 year provision, and an adequate but inflation-adjusted daily benefit – rather than a life time duration with a lower daily benefit may be suitable for you.

Shane Flait is a writer and educator. Get more info at www.EasyRetirementKnowHow.com