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Nursing Home Costs Nursing home costs currently average approximately $ 153 per day ($ 55,845 per year, depending upon the region of the country. High spot: New York City at $ 295 per day. Low spot: Hibbing, Minnesota, at $ 90 per day. Long Term Care Insurance Costs Coverage has become less expensive in recent years, but still remains costly. The average annual premium for a 65 year old ranges between $ 1,000 and $ 2,000 depending upon the deductible period, years of coverage, inflation protection and other coverage options. Tips on buying Long Term Care Insurance:
- Consider a policy that pays for both nursing home stays and home care.
- Beware of the lowest priced policy. It may offer inferior coverage and the premiums may increase when the insured is least able to afford it.
- Do not buy an "attained age" policy - one with initial low premiums that rise rapidly with the policyholder's age.
- Avoid policies that require a hospital stay of at least three days before the company will pay nursing home benefits.
- Inflation protection is important. Choose a company that charges a level premium.
- If purchasing a home policy, buy one that covers aides who primarily help patients with personal or custodial care, rather than one that pays only for skilled care.
- Beware of policies requiring that care be medically necessary for sickness or injury. Look for updated policies that use a disability standard. It takes into consideration medical necessity, cognitive impairment and the ability to perform daily activities.
- Look for a policy containing a non-forfeiture clause. This option typically allows an individual to collect some reduced benefit if, for any reason, the individual stops premium payments after a number of years.
- Do not buy Long Term Care Insurance if the high premiums pose a financial burden. Do not spend more than 5% to 7% of gross income on this insurance.
- Many planners recommend long term care insurance for people between the ages of 55 - 72 with net worth of $ 150,000 or more excluding house and car. Individuals with a low net worth probably do not have enough to make the high cost of premiums worthwhile.
SOURCE: Income Tax & Financial Planning Quickfinder Handbook 2003 Edition. The author/publisher is not engaged in rendering legal, accounting or other advice and will not be held liable for any actions or suit based on this Quickfinder Handbook Unreimbursed expenses and insurance premiums for qualified Long Term Care are deductible as medical expenses on Schedule A of Form 1040 as an itemized deduction. See IRS Pub 502. | |
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