When buying ong term care insurance, or doing long-term financial planning, one thing to keep in mind is the ever-rising long term care cost. Several factors determine how much care is likely to cost you. To make sure you will have adequate savings or insurance coverage, it's important to take those things into account and then adjust your calculations for inflation.
Get a free insurance quote
from an impartial wizard
One thing to note is that there are many types of care, with differing long term care costs. Nursing home costs are the highest, and now average just over $70,000 for a year of care. Assisted living is more affordable, at less half of the annual cost of a nursing home, around $30,000 a year. Home care is even more affordable. The hourly rate averages $25 for skilled health care, and other kinds of living assistance are less than $20 per hour.
These figures represent only national averages, and rates for long term care costs can vary widely from state to state. For example, an assisted living facility in an affluent East coast town can be two, or almost three times the cost of assisted living centers in other regions, like Louisiana. Nursing home and assisted living costs differ no matter whether you're in Chicago, Denver, New York, Los Angeles or anywhere in between.
Even if the area you're living in has affordable long term care facilities, you can avoid the inevitable increase in cost that follows inflation. When planning for the future, it's best to take current costs and adjust for inflation to when you estimate you're more likely to need care. A figure of 5% inflation per year is a fair estimate.
Although five percent may not seem like a large amount, compounded annually, it can mean an increase in daily nursing home costs from $150 to $191 in just five years. For a year of care, that would be almost $15,000 over the pre-adjusted amount!
Many long term care insurance policies now offer inflation protection, which means the amount of daily benefits you can receive for long term care costs increases every year to keep up with rising costs. In order to get the full benefit from such a policy, it's important to select the right amount of coverage to begin with, so that you don't have to end up paying any out-of-pocket expenses.
Insurance costs may be higher with inflation protection, but if you need long term care, you will save money in the long run. While some people plan on saving on their own or using Medicaid, long term care insurance cost is a worthwhile investment for people in certain financial situations.
Long term care costs are significant, and always on the rise. You can prepare and give yourself every possible advantage by planning for the cost ahead of time. For some people that means insurance, for others savings, but in all of these cases, determining long term care costs is an essential part of the planning process that can save you a great deal of out-of-pocket expenses should you find yourself needing care. To ease the process of cost determination, get a free long term care insurance quote today.
This long term care review can introduce you these necessary considerations.
|
