Financial Futures

The average daily cost of a private room in a nursing home in the United States is $70,080 per year, or $192 per day, according to the 2004 MetLife Market Survey of Nursing Home and Home Care Costs, released recently by the MetLife Mature Market Institute.

Your financial legacy can quickly be eroded by these costs unless you happen to be very wealthy. For the rest of us, the ideal means to protect our assets and to provide the money needed for nursing home or home health care is through long-term care insurance.

Long-term care insurance policies vary dramatically between insurance companies and should be studied carefully before making the decision to buy. Some provide a certain amount of money that will be available in times of need. Others provide a particular amount either per day or per month. Premiums can also be dramatically different and are usually dependent on the policy provisions and benefits provided, including the period of time covered, the age of the insured at the time he or she purchases the policy, and the amount of the benefits.

When reviewing a long-term care insurance policy, there are a few basic issues that should be evaluated and considered:

• First, what type of nursing care is covered? The best policies cover the complete spectrum of care from skilled nursing care through custodial care, including home health care. Some policies even have a bed reservation policy, which holds the place of the policyholder at the nursing home in the event that he or she requires a hospital stay while residing in the nursing home facility.
  
• Of course, you can choose the amount of the benefit that you want and how long you want the benefits to last. Planners usually recommend that you purchase insurance that will cover at least one-half, if not two-thirds, of the average daily cost of nursing home care. Some policies even include an adjustment for inflation so that the benefit of your plan will keep pace with the increasing cost of care.
  
• Benefits are triggered differently under policies as well, although most refer to the loss of ability to perform "activities for daily living," which include walking, eating, dressing, toileting and bathing. Policies will generally begin paying benefits when an insured can no longer perform one or more of these tasks. The fewer the number required, the more desirable the policy. Watch out! Some policies require a hospitalization before coverage will apply; you should try to avoid policies with this requirement.

Expert Advice for Audrey
Protecting Assets
Long Term Care Insurance
Medicare and Medicaid
Estate Planning Documents
Elder Care Attorneys, from our sponsor, Merrill Lynch

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