Long-term health care

Americans are living longer, healthier lives than ever before. But odds are that, during your life, you'll need some type of ongoing health care-related assistance for illness or injury.

According to the U.S. Department of Health and Human Services, about 70% of Americans who reach age 65 will need long-term care at some point in their lives. More than 40% will need care in a nursing home.¹

The costs of home care, nursing homes and assisted living facilities are rising quickly. For example, the national average cost of one month in an assisted living care facility was $3,131 in 2009. The fee for a private-pay, licensed home health aide ran about $21/hour, while a private room in a nursing home averaged $219/day.¹

Why you need to be prepared for long-term health care

If you ever need long-term care, Medicaid covers only some of its costs. HMOs, Medicare and Medigap will not cover every health-care expense either. As a result, out-of-pocket costs for long-term care could significantly impact your life savings.

Long-term care insurance can help

Long-term care insurance (LTCI) pays a specific dollar amount per day for a set period of time for whatever type of long-term care is outlined in the policy. For example:

• Most of the policy benefits are triggered by physical or mental impairments designated in the policy.
• The most common impairments result in an inability to perform certain basic daily activities.
• Some policies require a doctor to certify that care is medically necessary.
• Policies offering benefits for cognitive or mental impairments often require an inability to pass certain tests.

How to compare policies

• Shop around.
• Make sure you carefully read and understand the Outline of Coverage portions.
• Check insurance company ratings (through A.M. Best, Moody's or Standard & Poor's) for financial stability. Each has its own system for rating companies so you may want to check more than one resource for comparison.
• Pay close attention to and compare these provisions:
  • Elimination (waiting) period before benefits are paid
  • Duration of benefits
  • Daily benefit
  • Optional inflation rider
  • Range of care
  • Coverage of pre-existing conditions
  • Premium increases during policy period
  • Guaranteed renewability
  • Grace period for late payment
  • Return of premium
  • Prior hospitalization

Other considerations for long-term care

Talk to your family and financial advisor about various care and housing options and their costs for yourself and others. For instance, if your parents require long-term care, do you anticipate providing financial support for them? If you became injured or ill to the extent that you require full-time assistance, what type of care would you prefer — family members, nursing home?

In addition, your attorney and financial advisor can help you organize and address more complex questions:

• How much money should you plan to set aside for assistance? When should you start?
• Have you coordinated long-term care planning with your estate planning needs?
• Have you prepared advanced medical directives?
• Are your important documents and records organized?

Get information and advice

Ameriprise financial advisors are well-versed in the fine points of long-term care insurance and can help you decide if this insurance is right for you, provide guidance as you review policies, and incorporate provisions for LTCI into your financial plan.