The average annual cost of a nursing home stay is not less than $74,000 across the country. But only 10% of Americans over the age of 65 have Long Term Care Insurance to cover this high bill. Long Term Care Insurance Premiums are more affordable than you think.

More than 100 insurance companies sell Long Term Care Insurance. Look into products of a company which has not increased it’s premiums in the last 15 years.  Insurance premium increase must meet state regulatory approval and few companies have a record of stable pricing.

Standard LTCI policies clearly define the types of care they cover and pay only for such services. A policy which offers cash benefit is worth considering. If you would like to use the money as you want, for example use it for in-home care, pay a family member taking care of you etc., then “Disability Model’ policies pay cash for policy holders who qualify for benefits. One of the draw backs here is benefits over $250 per day may be taxed as income.

The premium of your long term care insurance policy is heavily dependent on the age at which you buy the policy. Buying young ensures a great premium rate. If you wait till you are older you are not only taking the risk of higher premiums but you may develop health issues which will not allow you to qualify for insurance. There are attractive and competitive LTCI premiums rates for those who are still in their 40s.

There are insurance companies which offer couple’s discount regardless of whether you and your partner are married. Even unmarried including same sex couples can avail the couple’s discount. When a mother and an adult daughter live together (known as multigenerational cohabitants) they too qualify for a couples’ discount.

When only one partner applies for a policy and qualifies for coverage there are only small discounts available. With a “shared-care” plan married and unmarried couples can save big on premiums. If a couple buys a shared plan of 6 years of coverage and one spouse uses only one year of benefits, the other spouse has 5 years of coverage. This kind of policy where each can tap into each other’s benefits is cheaper than buying two different policies.

Women today can expect to live longer than their maternal ancestors due to their better life styles and being more aware of diseases related to women. Increased longevity also means increased probability of needing long term care. Women’s standard of living and their quality of life as they grow older will be affected by the long term care they will receive.

Traditionally women are the care givers. They give and receive majority of the long term care services to other family members which comes with high costs. At the end of their life time they may need long term care services themselves which again involves high costs.

Women are more likely than men to help aging family members with bathing, dressing and other personal activities of daily living. They often also help out in grocery shopping, cooking meals, doing other household chores and giving medications. Along with all this women may be caring for their own young family and become a part of the emerging ‘sandwich generation” of care givers.

Whether she is a daughter, sister, niece, wife, mother or friend the woman’s care giving role takes a toll not only on her emotions and physical health but also on her finances. Providing long term care for loved ones comes with loss of time and wages at work and missed carrer opportunities. Add to this is the increased strain on her finances because of the additional costs of special medical equipment and home modifications which may be necessary.

There may come a day when she may need long term care services and have no one to provide her with the needed long term care. The ability to finance the required long term care whether in her own home or in a nursing facility and at the same time protect her life savings becomes extremely important. Long term care insurance provides a woman with options to customize a policy which best fit her individual needs allowing her to maintain personal as well as financial independence.

When private insurance companies selling Long Term Care Insurance, state residents who buy these LTCI and the state government collaborate or partner together we have what is known as A Partnership Program. For those who continue to require long term care, such Partnership Programs enable the purchase of a more comprehensive shorter term long term care insurance policies worth while by linking these special policies or Partnership Qualified or PQ policies with Medicaid.

Partnership Qualified policies have requirements which differ from state to state. But generally, most PQ policies are required to be Tax Qualified, offer comprehensive benefits (inclusive of institutional and home services), and provide consumer and state specific inflation protection. In most cases the only difference between LTCI policies sold in a state and PQ policies is the amount and type of required inflation protection offered by each.

The State certifies Partnership policies when they meet specific requirements for the Partnership Program. Individuals selling these Partnership Policies are trained by the State insurance department to understand how these policies work and relate to private and public coverage options.

When you buy a Partnership Qualified policy you are eligible to apply for Medicaid under modified eligibility rules. One such rule includes a special feature called an “asset disregard”. This special “asset disregard” feature allows you to keep assets that would not otherwise be allowed if you wanted to qualify for long term care services benefits which come with Medicaid.

With these policies Medicaid will disregard the total amount of assets equal to the total amount of benefits you would actually receive with your Partnership qualified policy. As these policies come with inflation protection, the amount of benefit you receive can be higher than the benefit amount you originally purchased with the policy. For example if you have a Partnership Qualified policy for a $100,000 benefits and apply for Medicaid when you are eligible, you are eligible to retain 100,000 in assets over and above the state’s Medicaid asset threshold.

In most states the Medicaid threshold is $2000 for a single person and higher for married couples. Individuals and states both benefit from Partnership programs. It allows individuals to pay for the long term services they need while still being able to retain and enjoy their assets. For the state, it decreases the amount spent on long term care services from Medicaid dollars.

When choosing rider options while buying Long Term Care Insurance policy, an Inflation Protection Rider is one of the most important riders to consider. There are four important Inflation Riders for different age groups. Depending upon your age choose one that works best with your Long Term Care Insurance policy.

The No Inflation Protection
For those 80 and older it would be more advantageous to buy as much daily benefit as possible instead of buying inflation protection. So the choice of not buying inflation protection may work best for people 80 and above. Consider buying the highest daily benefit you are able to afford.

Guarantee Purchase Option
The Guarantee Purchase Option comes with no upfront costs. Instead these costs are built in or have a minimal charge which is about 2%. With this rider comes the option to increase the daily benefit value once every two or three years depending upon the contract. The disadvantage of this option is the new age of the insured (every two or three years) influences the cost of each increase. This would be beneficial to people in their 70s.

Simple Inflation
The Simple Inflation Rider allows for an automatic increase in the daily benefit value by 5% every year. But this 5% increase in daily benefit value comes with a 40% - 60% increase to the premium. But this rise in cost of premium results in double the daily value benefit in 19 and a half years. This Inflation Rider is best suited for people in their 60s.

Compound Inflation
Many would agree that the Compound Inflation Rider would be the best option for those under the age of 60. With this kind of rider even though your premium may double the benefits you gain is well worth it. Usually Compound Inflation adds 5% to the daily benefit. In 14 and a half years the daily benefit doubles because the 5% daily benefit increase is compounded annually. It is very common to see compound inflation choices at 3%, 4% or sometimes even linked to the Consumer Price Index.

In all the above options, age plays an important factor in your choice of LTCI and Rider Options. Other equally important factors influencing your choice of LTCI and rider options are your finances, health and family situation.