Ask Stacy: Should I Buy Long-Term Care Insurance?

The cost of nursing home care can easily exceed $100,000 annually. While that's out of the reach of many, so is long-term care insurance.

Ask Stacy: Should I Buy Long-Term Care Insurance? Photo by Photographee.eu / Shutterstock.com

Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is about long-term care insurance — specifically, whether a couple in their mid-50s should have it. Here’s what I think.

For more information on this topic, check out “Should I Buy Long-Term Care Insurance?” and “This Retirement Expense Is Rising Fast — Have You Planned for It?” You can also go to the search at the top of this page, put in the words “long-term care” or “nursing home” and find additional information on this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Today’s question comes from Theresa:

“Should my husband and I consider purchasing nursing home insurance? We are in our mid-50s, debt-free, and have a retirement plan.”

First of all, Theresa, congratulations on being debt-free and having a retirement plan!

I’ve thought about nursing home insurance myself, also known as long-term care insurance. I’m older than Theresa, and I’ve never purchased it, despite having reported on it for years.

Why haven’t I bought it? One reason is that I have a special situation. My wife is much younger than me, and she’s a nurse practitioner. So, I kind of have my own built-in nursing home insurance. Another factor is that neither of my parents — both of whom died years ago — had an illness requiring a long nursing home stay.

While these circumstances hardly guarantee I won’t someday need this coverage, they’re examples of personal factors to consider before paying thousands a year, perhaps for many years, for this type of insurance.

At first blush, long-term care coverage would appear important. Medicare, which we’ll all depend on when we reach 65, doesn’t cover long nursing home stays. It does cover rehabilitation in a nursing home for a month, but not prolonged stays. So, a lot of people are worried — with good reason — about how they’re going to meet those bills if and when they should need a nursing home.

Statistics suggest about 20 percent of Americans will someday end up in a nursing home. Despite this fact, however, only 8 percent of Americans have this type of insurance, most likely because it’s so expensive. While cost differs based on what’s covered and your age, prices range from $1,500 to more than $5,000 annually for this type of specialty insurance. That means many won’t be able to afford it whether they want it or not.

There are two categories of people who don’t need long-term care insurance

  • Rich people: They’re self-insured.
  • Poor people: Medicaid — the government program offering medical care for those with low incomes and few assets — pays for nursing home care.

The solution for the rest of us is to read, compare costs and benefits, and decide if this insurance makes sense and is affordable.

When shopping for long-term care insurance, pay attention to the fine print. Look for exclusions, benefits, when the policy kicks in and how much it pays. Many policies may also feature rising premiums, which could price you out of your policy just as the need for it approaches.

There are so many different things to look for when you shop for nursing home insurance, I can’t begin to cover them in this short video. But if you’re coming up on your mid-50s, do some research and see if it makes sense. There’s plenty of information online, including at MoneyTalksNews.com.

I hope, Theresa, that answers your question. Unfortunately, there isn’t a yes or no to this. You’ve got to weigh a lot of factors, some objective, some subjective. So, do some reading and see if it’s right for you.

Now, let’s close with our quote of the day. It comes from writer Ambrose Bierce.

“Lottery: a tax on people who aren’t good at math.”

I like that one because I hate lotteries. Hope you guys have a super-profitable day, and I’ll see you right here next time.

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Got more money questions? Browse lots more Ask Stacy answers here.

Stacy Johnson
Stacy Johnson @moneytalksnews
I'm the founder of Money Talks News and have spent the last 40+ years in the personal finance trenches. I'm a CPA, author of a few books and multiple Emmy recipient. I'm ... More

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