Long term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.
A number of considerations go into how much long term care insurance that you should buy. The average cost of a room in a nursing home is $70,000 per year and the average monthly base rate in an assisted-living facility in Indiana is $3,693. Home care costs can vary.
One way to calculate how much to buy is to take the average cost of care where you live and subtract from that your daily income. If, for instance, nursing homes cost $300 a day and your income is $3,000 a month, or $100 a day, then your daily benefit should be at least $200 a day. Some policies can be indexed and increase the daily benefit in future years.
The next factor is what period of time the policy covers. Most policies cover 2–5 years. Policies also have an elimination period, also known as a deductible period, which is the length of time before benefits are payable.
Most people don’t need lifetime coverage, so a good length of time is usually five years. Since a five-year Medicaid look back period exists for most asset transfers, you could transfer most or all of your assets to your children or into an irrevocable trust if you go into a nursing home to pay for your care. Visit my blog titled “7 Asset Transfers Which Will Not Affect ‘Nursing Home Medicaid’ Eligibility” at EvansvilleAttorney.com to learn about several asset transfers which will not cause a Medicaid penalty period, even if made within the five-year Medicaid look back period.
Some long term care polices, called “Partnership policies” contain a special State-added feature known as “Medicaid Asset Protection”. I will discuss Partnership policies in my next article in this series.