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.

With advances in medical field and healthier living choices people are living longer. The aging population is increasing and growing number of families are experiencing first hand the advantages of having a Long Term Care Insurance policy. According to media reports the average age of people buying Long Term Care Insurance has changed from 72 in 1990s to almost 58 today. This is due to the growth of Long Term Care Insurance policies, lack of alternative plans which pay for long term care and increased family awareness about LTCI policies.

Growth of LTCI Policies
More than 10-15 years ago LTCI policies were sold as nursing home policies. Long term care insurance policies have evolved over the last few years. Consumers have a choice of comprehensive plans where they can not only choose the kind of care they want but also where to receive this care.  Today’s LTCI policies offer a wide variety of home care, assisted living care, adult day care or skilled nursing home care. Families are able to appreciate the option of their elderly staying in one’s own home and receive the long term care they need.

Fewer Alternative Choices
Medicare, Medicaid and Medigap do not pay for long term care for an extended period of time. Medicare, the Federal Health Insurance program pays only for short term skilled care such as specialized inpatient hospital stays for a limited time. Medicaid, a state based program supplemented by Federal Funds is a welfare program. You need to expend all but $2000 of your assets and meet your state’s poverty criteria to be eligible for Medicaid. The private supplemental health insurance policy which covers some of the costs that Medicare does not cover is Medigap.

Growing Consumer Awareness about LTCI
By 2030 the Baby Boom Generation reaches retirement and the senior citizens population will be nearly twice what it is today. Many families are witnessing the difficulties when aged parents and loved ones do not have a long term care insurance policy. The financial hardship a family can find itself when caring for aged parents and loved ones has forced many families to openly discuss long term care choices and long term care insurance.

Families who have members suffering from cognitive impairment resulting from Alzheimer’s disease are becoming aware of the importance of planning early for the care of their loved ones. More and more families with loved ones needing chronic care to help perform daily activities because of a disability or an ongoing illness are realizing the value of buying LTCI.

The desire to protect one’s life savings has encouraged families to have open discussions about planning for long term care. Involving the family in decisions regarding the purchase of LTCI allows the children to be aware of the benefits of LTCI and be prepared to handle a difficult situation in life. Children in 30s and 40s who are part of such decision making often buy a LTCI for themselves later on as they realize the value of it.

When considering buying a Long Term Care Insurance policy a general rule of thumb is to look for the basic coverage and then add a few additional riders to make the policy best fit your needs. Almost all Long Term Care Insurance Companies offer polices which provide some kind of combined nursing home care, home health care, assisted living and adult day care services. But by offering policies with special features, riders, discounts and expanded benefits, insurance companies differentiate themselves and their products.

Riders are special provisions of the insurance policy which provide additional benefits which make adjustments to the basic contract or policy. A rider can be defined as something added to the basic policy to provide additional benefits at an extra cost. Though riders add valuable benefits to your policy choose the optional riders which are worth the extra cost.

Following are few of the important optional riders to consider:

Inflation Protection Rider
This is the most important rider to keep in mind while buying a LTCI policy. Most plans offer a 5% compound inflation protection or 5% simple or equal inflation protection to ensure that your LTCI benefits are on par with the rising cost of health care services. You do not want to lose purchasing power due to inflation at a time when you need it the most.

Spousal Benefit Rider
With this rider you and your spouse/partner can use each others LTCI benefits. For example if you are married and buy a three year shared benefit policy and you use only two years of benefits, your spouse can use the remaining 4 years.

Home Health Care Elimination Rider
This rider eliminates the deductible or elimination period for coverage for Home Health Care. This rider makes you eligible to receive your home health care benefits on day one of your claim without having to wait out the elimination period.

Non Forfeiture Benefit Rider
This rider guarantees you that you will not lose all your benefits if you stop paying premiums. It allows you to use benefits sum total of the value of premiums paid in the past.

Return of Premium Benefit Rider
If in your life time you do not use any of your long term care insurance policy benefits then your beneficiary will be entitled to receive some or all of the premiums you had paid.

Restoration of Benefits Rider
If you come off claim for 90 days and make a full recovery no longer needing long term care, this rider restores your policy benefits to its original maximum value. For example if your policy has a three year maximum period and you used one year of benefits, this rider will add back the money you used for a year. This makes you have a brand new policy.

For a generation for whom children are not common and stable couples very rare, the aging baby boomers are in need of care support. How the family circle will evolve to the elderly from now until 2030 has been a topic of many demographic and Long Term Care studies. Traditionally it has always been the family circle which provides care for the elderly. In fact 70% of care provided to frail seniors comes form the informal network - mainly the children or the spouse. This is only possible with today’s elderly (parents of baby boomers’) who have more children to care for them and generally live in stable couples.

Very soon the situation will change. Fewer children per couple, high divorce rate, common-law unions and blended families are few factors to note. Add to this better medical care, lower death rate and rise in the average life expectancy rate has led to people living longer. Those couples who have not separated will be living together longer.

Today’s boomers - tomorrow’s elderly - had fewer children. Who will take care of this generation of seniors? Less than 10% of even those who can afford Long Term Care Insurance of this Baby Boom generation have bought LTCI. Millions of baby boomers have not planned for their long-term care. Many will find themselves in difficult situation, without funds to pay for long term care. They will be forced to turn to the public system to help them pay for their long term care.

The need to develop new programs and new ways to help support the long term care for aging seniors is felt more than ever before right now. Designing new support systems for this increasing aging generation is very strongly needed. The public system needs to adapt when informal services have changed. These are the reasons which have forced the government to try a voluntary plan (the CLASS Act) in the hope that at least a small percentage will do some planning. Of course the best choice a baby boomer can make regarding his long term care is to plan ahead and seek long term care insurance.

Medical Underwriting or Health Screening is a process insurance companies use to determine if you are eligible to buy an insurance policy. Different Long Term Care Insurance Companies have varying health screening procedures. Few companies review each patient’s medical records, while few study the records if you are over a specific age and still others conduct a phone or a face to face interview if you are over a certain age when you apply.

Many companies depend entirely on your answers to the application questions and ask you to sign a medical release form if they decide to sell you a Long Term Care Insurance Policy. Few companies may need copies of your medical records when you are buying a policy while others may need it only at the time of claim. If you want to increase your benefits or buy new benefits the company may require additional health screening. The premium you pay for additional benefits in both cases will be based of your present age. The increased cost will be added to your premium.

LTCI companies have different health screening procedures. While you may be denied coverage by one company, another one may accept you. You may not be eligible to purchase a policy if you already:
use long term care services and need help with activities of daily living
have AIDS or AIDS Related Complex (ARC)
have Alzheimer’s disease or any form of cognitive dysfunction or dementia
suffer from Multiple Sclerosis or Parkinson’s or any other progressive neurological condition
have a history of strokes or have had a stroke within the last 12 to 24 months
have cancer which has spread beyond its original site.

The above are the primary conditions that can make you ineligible for buying LTCI. But if you develop any of the above conditions after obtaining coverage, you will still be covered for the care you would need for that condition. After you have been accepted for coverage, your coverage can be cancelled only if premiums are not paid when due or you have received the policy’s maximum benefits.

Long Term Care Insurance Policy Premiums are determined by your age, type of policy you choose, daily benefit amount to be paid, number of years the policy will pay benefits, the number of days after you qualify for the benefits before the company will start to pay benefits, and your choice of inflation protection. Over the years the LTCI premiums can increase. At the time of buying a LTCI policy, the agent should provide you a Personal Worksheet which shows among other details if the company has had rate increases since 1990. This sheet also informs you in which states and by how much the rates increased.

The California Department of Insurance website lists the rate increases for every company that sells LTCI. California passed legislation in 2000, making it difficult for LTC insurance companies to increase future premiums. Beginning 2006, it became mandatory for companies filing for premium increases over a certain amount to offer their policy holders the choice of stop paying their premium and keep the benefits equal to the total amount of premiums already paid. Generally only a small amount of care will be financed by the total amount of premiums you have already paid and just because of a premium increase you were unable to pay, you will not lose all your benefits.

To find out what your options are if your rate increases, contact the CDI online. By reducing some of the benefits of your policy you have the right to negotiate with your company for lower premiums. This option or a similar option may be offered by few companies subject of a class-action law suit as part of the settlement agreement. If you have received notice of premium increase or you need to lower your premium contact your local Health Insurance Counseling and Advocacy Program (HICAP) office online or at 1-800-434-0222.

Long Term Care Insurance Policy Premiums are based on:
• your age
• kind of policy you choose
• daily benefit amount to be paid
• number of years the policy will pay benefits
• after you qualify for the benefits the number of days (if any) before the company will start to pay benefits
• choice of inflation protection.
Some companies will insure you for a higher premium if you have a particular pre-existing condition.

Age is one of the most important factors which influence your Long Term Care Insurance Policy Rates and Premiums. If you are in your mid forties your annual premium can only be a few hundred dollars as opposed to several thousand dollars if you are in your in mid seventies. The cost of benefits you choose is calculated differently by different insurance companies. It is due to this reason that you may see significant differences between premiums for similar benefits.

A simple example a Long Term Care Insurance Company may calculate the premium based on every $10 of the daily benefit you choose. The premium for daily benefit of $100 would be $950 per year, if the company charged $95 for each $10 of daily benefit. A similar package of benefits may cost $150 with another company making the annual premium rise to $1,500.

Your LTCI premium will also be affected by the method and amount of inflation protection you choose. This nearly doubles the cost for those not expected to need care for many years – usually for those in their 40s and 50s. Your ability to change LTCI policy diminishes as you age but your probability of developing health conditions which make you ineligible to apply for new benefits increases.

Keep in mind that LTCI is an investment you hope that the rest of your life is financed by. It is important to buy a policy from an established company with experience in LTC insurance.