It is not contended ?whether Americans understand the value of insurance ? routinely they buy it for cars, homes, 
health and in some special cases, even pets and boats. All varieties of insurance are widely accepted as a necessity to?well being?and security as we plan to protect ourselves and the ones we love, with the exception of long-term-care insurance. A sparse 8 million out of more than 313 million Americans have long-term-care protection according to the American Association for Long-Term Care Insurance.
Take Geneva Hunter for example, 66, who is?among?the masses without protection. Despite being well aware of the advantages of long-term-care protection, and taking care of her live-in 89-year-old mother, Ida Christian, who has Alzheimer?s, Hunter cannot afford any such protection.
At the time it was offered through her company she could not afford both it and to take care of her mother at the same time. With monthly payments close to $400, ?Hunter had to make her choice. With every passing birthday she feels more pressure to buy insurance, fearing she too would become a financial burden on her daughter.
Independence lies at the heart of what the American dream embodies: freedom from burdening others, but the reality is that each year, an estimated 11 million U.S. adults require some form of long-term care.
Long-term care is often the most devastating financial burden on the ones we love: Just one hour of home-health-aide care costs close to $20, with the average private nursing home room costing $87,000 each year. Extended periods of custodial care are not covered by either standard employer-based medical insurance or Medicare.
With 78 million baby boomers in the U.S., the answer to the question of who will prepare their meals and help them dress is rapidly approaching, and will not be diffused by naivety and neglect. A vast number of baby boomers, people born between 1946 and 1964, are expected to fall so far into poverty trying to provide themselves with paid care that they will warrant Medicaid ? a program designed to cover the deeply impoverished.
Those with long-term-care insurance will comprise the fortunate few, but with insurance giants like Prudential and MetLife making their departure from the business, both whom have ?recently withdrew from offering long-term-care policies, the fortitude begins to dwindle. Others, such as John Hancock and Genworth Financial, have sought the service of the state as regulators, seeking permission to exponentially raise premiums. Insurer?s requests for higher rates have indicated spikes of 18 to 40 percent, and in limited cases, 90 percent, based on location.
Below are answers to some common questions pertaining to long-term-care insurance.
What is long-term-care insurance?
This type of insurance covers services needed by those with chronic illness or disability. Immediate medical expenses are covered by health care insurance or Medicare, like a surgeon?s bill, while long-term-care insurances helps people with the cost burden of chronic illnesses, like Alzheimer?s disease, and various disabilities. Everything from basics to skilled care from therapists and nurses are covered by the policy for months and even years.
Do you have to be in an institution to collect your benefits?
Typically long-term-care insurance covers the out-of-pocket expenses associated with home care, assisted living and nursing homes. Most policies have a waiting period that functions similar to a deductible. You may need to wait 90 to 120 days before your benefits begin to cover these costs if you need the assistance of a home-nursing aide.
How much does insurance cost?
According to the American Association for Long-Term Care Insurance, people ought to anticipate paying an average of $3,335 per year to cover a couple of healthy 60-year-olds on a plan that pays out a $150 daily benefit for up to three years. However, prices can dramatically vary based on the following factors: Purchaser?s age, the level of inflation-adjustment protection, and whether the daily benefit will be $100, or a larger amount such as $150 or $200.
Why is the coverage so expensive?
High premiums account for the high level and uncertain degree of risk made by the insurer. For example, a potential claim on an insured home can be reasonably estimated in the event it were burned to the ground, while predicting how much care a person might need, and for how long is very difficult.
When should you get the insurance?
When you sign up by age 60 it is less expensive. You must be medically healthy, and like auto insurance, a policy rarely has no ?surrender? value, meaning you will not recover costs unless you medically qualify for care.
Is it worth buying?
It is the opinion of experts that long-term-care insurance can be a tremendous help, especially for those without children and modest retirement savings. However, due to the fact that a policy typically only covers three years of care, a number of people live beyond that cap and are subject to new policies written with more restrictions to reduce the insurer?s risks.
Further research is required to determine whether is beneficial to spend more money on premiums, or focus on enhancing ?a retirement savings account.
Attorney Christopher J. Berry is a Metro Detroit estate planning and elder law lawyer who helps families, seniors, veterans and business owners with their important legal needs. Oakland County estate planning lawyer, Christopher Berry is a partner in the Bloomfield Hills law firm of Witzke Berry PLLC. Mr. Berry practices in the areas of estate planning, business, probate, veterans benefits & Medicaid planning. Follow Christopher on Twitter @chrisberryesq
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