by Tom Russell

Life-expectancy in the United States is now 80.4 years for women, and 75.2 years for men. Since a longer life increases the odds of needing long-term health care at some point, the choice to self-insure, or transfer the risk to an insurance company, is one of the most important financial decisions we’ll make.

The risk of needing care and filing a claim are high. For example, odds of your home catching fire are 1 in 1200, an automobile accident is 1 in 240; however, the chance of needing long-term care at some point in your life is 1 in 3.

Who should NOT own long-term care insurance?

The State of Florida, where the senior population is large, offers a wealth of consumer guidance on long-term care insurance. The State of Florida recommends against spending more than 5% of one’s yearly income on long-term care insurance premiums. They also recommend that people with assets less than $200,000 (which includes their home) decline the insurance, since there is the Medicaid program. MediCAID is not to be confused with MediCARE. Medicare does not pay for long-term care, and MediCAID requires a “spend-down” before qualifying for care. Your assets are used first, then the state steps in to pay.

One reason people decide NOT to acquire a policy is concern over never needing long-term care, and having thus wasted the money for the premiums. However, I’ve noticed that those who do purchase the insurance (now four million people in the United States) usually have a firsthand experience with a friend or loved one who needed long-term care. They witnessed the severe financial and emotional stress a long-term care event can cause the entire family. Perhaps they have been caregivers and do not want to see that burden fall on their children. When the experience of long-term care is close and personal, it seems the possibility of “wasting” the premium payments, if a claim is never filed, is now something that can be tolerated.

Another important consideration is that a change in health can prevent one from qualifying for a long-term care policy. You cannot get it when you need it. The decision to insure can only be made when one is relatively healthy and insurable. Also, the longer you wait the higher the premiums.

How do you investigate long-term health care insurance?  See the extensive educational resources in “Our Services” at this website, under “Long-term care.”

Tom Russell is a health insurance specialist serving the Rim Country since 1993, and author of the book “Navigate the Maze of Long-term Care Insurance.” He can be reached at 474-1233.