Ignoring the real problems with long-term elder care insurance

This morning, NPR ran a story on How to Shop for Long-Term Care Insurance. The crux of the story: look for a good monthly benefit, protection from inflation, and many years of coverage.

This was troubling, as there was no question as to whether or not you should even buy long-term care insurance. It is just assumed that insurance is the solution to the crisis we are facing in elder care.

Coluccio Law Elder Attorneys and Nursing home neglect lawyer

By 2030, about 20% of the U.S. population will be over age 65.

The average cost of elder care in a basic room in an assisted living facility is $3,022 per month. The monthly bill for full nursing home care averages $7,165.

The fact is many of us won’t be able to afford the elder care we need to live in nursing homes, assisted living facilities or even at home.  The wealthy will pay for their own care, and some – but not many – will get Medicaid or veteran’s benefits.

What’s wrong with long-term elder care insurance?

  • The policies don’t cover incidentals like rent and food. You don’t get to decide how your money is spent – that’s up to the insurance company.
  • Most policies have a 90-day deductible. If you only need help for a few weeks after an injury, for example, you’re on your own. Either way, be prepared to pay out-of-pocket for the first few months of care you need.
  • Insurance companies can change the terms at any time, meaning you can either pay the rate hike, or lose your whole investment.
  • There is no guarantee that your long-term care insurance provider will be around in a couple of decades, or whenever you need nursing home care.

Most of the time – as is the case in auto insurance – insurance companies make huge profits from people who pay their premiums and never need to collect on their benefits.

But for long-term care insurance, there is a good chance that many who buy it will need the benefits at some point.

If the insurance companies aren’t making money hand over fist, they’re likely to hike rates or get out altogether. This Forbes columnist says the entire industry is a mess, and speculates that long-term care insurance is not long for this world.


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