Individual Plan Design
There is a great deal of variety in plan design. There are some statistics at the bottom of the page to give you food for thought. Remember that the premiums may be income tax deductible. Basically the two points of view are what we call “short and fat” vs. “long and skinny”. In other words do you want a policy that pays:
- A shorter duration of time -- 2, 3, 4, 5, or 6 years.
- A high daily amount (fat)
Or one that pays:
- Forever (long)
- A lower daily amount (skinny)
Can’t you have both? Yes, you just have to be willing to pay the premium.
Another choice is what kind of inflation protection you want:
- None. The $250 per day you choose today never goes up.
- 5% simple increases.
- 5% compound with a 2X limit.
- 5% compound with no limit.
The correct choice for you will depend on your age, family history and how much you want to spend. By the way, not all choices are available in all policies or all states. Consult a long term care specialist (the Revet Agency would be a good place to start) to help you make the choice that is right for you.
There are also policies that cover couples as one unit. So if the husband dies without using any or all of his policy, the remainder would be added the wife’s policy value or vice versa.
There are many payment options as well:
- monthly, quarterly, semi-annually or annually
- paid up at age 65 (must be 55 or younger to start this)
- 20 pay – pay 20 equal annual installments
- 10 pay – pay 10 equal annual installments
- A large single payment – an annuity works here
You can also buy this insurance through your employer, group, or organization (sometimes through an affiliation program). If they don’t offer it now, we can easily set it up so they can. Keep in mind that the premiums are income tax deductible in some states and on your federal income taxes if you itemize. Many businesses can fully deduct the premiums since they are considered a form of health insurance. Again you should speak to a professional regarding this.
Here are some interesting numbers to contemplate:
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Generally, the older you are when you make a claim the more it will cost to care for you.
Most claimants get – 36 hours of paid care/week & 23 hours of family care/week
Rough numbers for where claimants live
- 48% live alone
- 52% live with a family member
- 85% get care at home
- 15% live in assisted living
- 5% in nursing homes
In addition:
- 25% of all claimants wish they had purchased more home care coverage.
- About 50% say they would not be able to stay home without the insurance.
- About 60% say they would not be able to afford the same level of care without insurance.
- Average Nursing Home costs nationwide for 2003 $181 per day.
- Home health care costs $18 per hour.
- In Alaska the highest daily rate in 2003 was $608.
- In NY City it was $392. for a private room.
- In the Albany, NY area the average nursing home daily rate is about $252 per day for 2005.
- The average rate of inflation for nursing homes is 4% to 8%.
All statistics are based on published articles or from personal surveys done by the Revet Agency.