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Consumer Watch: Long-term care insurance can save your savings in retirement

Apr. 21, 2011 - 02:04PM   |   Last Updated: Apr. 21, 2011 - 02:04PM  |  
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RELIABLE SOURCES

When seeking information on long-term care insurance, be careful about your sources. "There’s a lot on the Internet that looks informational, but it’s really out to sell you something," said Tom Bebbington, spokesman for Long Term Care Partners.
Some starter sources:
• Marilee Driscoll’s book, "The Complete Idiot’s Guide to Long-Term Care Planning."
• NAIC’s "Shopper’s Guide to Long-Term Care Insurance" at www.naic.org.
• The federal program’s official website, http://www.ltcfeds.com, which includes an online consultant tool that helps you design a plan based on your needs, age and location.

For some, it's hard enough to save money for an emergency fund, much less retirement. But who will take care of you if your "golden years" are not so golden? The Federal Long Term Care Insurance Program is running an open season through June 24, letting active-duty members and their spouses apply by answering fewer health questions — seven in most cases as opposed to 28.

Retirees and qualified relatives can apply for coverage at any time but must complete a full application. Generally, a physical examination is not required, according to Tom Bebbington, spokesman for Long Term Care Partners, which administers the federal program.Long-term care insurance is designed to reimburse you for the costs of necessary care provided in settings such as your home, an assisted living facility, an adult day care center or a nursing home. Medicare coverage will not pay for most of that. The Department of Health and Human Services says about 70 percent of people over age 65 will need long-term care, and there's a good chance you'll have to pay out of your own savings. Average 2009 costs for long-term care in the U.S.: å $198 a day for a semiprivate room in a nursing home.

• $3,131 a month for care in an assisted living facility.

• $21 an hour for a home health aide.

• $67 a day for care in an adult day health care center.

"Part of the reason we're having this open season is the Office of Personnel Management realizes that not enough people are planning," Bebbington said. "Not that everyone should buy the insurance — but everyone should plan ahead."

If your only source of income is a Social Security benefit or Supplemental Security Income, you probably shouldn't buy long-term care insurance, because you would qualify for government aid, according to the National Association of Insurance Commissioners. You also shouldn't buy a policy if you aren't sure you'll be able to pay the premium for the rest of your life, NAIC says.

If you expect to have a lot of money in retirement but don't want to use it to pay for long-term care, you may want to buy a policy. Some people buy a policy because they want to stay independent of government aid, or don't want to worry about being a burden on their families.

The younger you are, the cheaper the policy. The average age at which people buy the government's long-term care insurance is 52, and the most commonly purchased plan costs $100 a month, Bebbington said. Some reasons to consider it:

• It's employer-sponsored and regulated by OPM, which means rules are the same throughout the country.

• Because its administrative costs are lower, coverage is usually less expensive than in the private sector, Bebbington said.

• There is no wartime exclusion, unlike some private plans.

Not everyone who applies is eligible, but most who are excluded have already been diagnosed with a degenerative physical or cognitive disorder. Conditions such as high blood pressure or diabetes generally are not a problem, because they are being controlled under a physician's care, Bebbington said.

Military personnel should think about where they're going to retire, because costs vary from one area to another. At www.ltcfeds.com, you can plug in your state and nearest city and find out what the estimated costs will be.

Questions or comments? Email staff writer kjowers@militarytimes.com?subject=Question from ArmyTimes.com reader">Karen Jowers at kjowers@militarytimes.com">kjowers@militarytimes.com.

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