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Long-term care meets daily needs

Health insurance covers a lot of things, but don't count on it if you find yourself needing long-term care at home or a nursing home.

"People assume their health insurance or Medicare would likely cover it," said Frank Titus, assistant director of the insurances services program for the Office of Personnel Management. "The only vehicle that provides for long-term care is long-term care policies."

Long-term care is not medical care, but the care required for what insurance companies call "activities of daily living": bathing/showering, dressing, eating, getting in and out of a bed or chair, using the toilet and walking. A person who needs help with two of the six activities needs long-term care.

Neither Tricare nor other medical insurance plans have provisions for long-term care, which can cost tens of thousands of dollars a year for people who need assistance to manage daily non-medical activities. However, several insurance companies, and many employers, offer long-term care policies.

The Federal Long Term Care Insurance Program has been available to all active federal employees and military members since 2002. The program also is open to spouses, parents, parents-in-law and adult children of employees. (Federal employees who are expected to work less than six months are not eligible.)

As a general rule, the premiums for any long-term care insurance policy will cost less the younger you are when you buy a policy, but you might not want to buy a policy until you are in the 55-to-65 age range, one insurance expert said. If you start paying premiums in your 20s, 30s or even 40s, you could pay thousands of dollars into a policy that you may never need, said Steve Weisbart, an economist with the Insurance Information Institute.

"I would rather see [people in the 25-to-45 age range] buying proper amounts of life insurance and investing for retirement long before they buy long-term care insurance," Weisbart said.

Having a well-established savings account will come in handy if you do decide to buy a policy. Most policies have a waiting period before you can start using the benefit. The waiting period begins at the time you need the care. In the meantime, you must pay for your expenses out of your own pocket.

The federal long-term care plan gives policyholders an option between 30-day and 90-day waiting periods, while Weisbart said some insurance plans have waiting periods of six months or even a year.

While you might want the benefit to kick in as soon as possible, choosing a longer waiting period will lower your premiums. That's something to think about if you are going to be paying premiums for several years, Weisbart said. And the waiting period gives you all the more reason to save and invest your money now so you can afford to pay for care during the time you don't have coverage.

When buying a policy, people should purchase coverage for the longest period they can afford, Weisbart said. Many companies offer policies that provide coverage for a few years or a lifetime, as well as policies that have unlimited benefits.

Geographic location and local costs of long-term care are important factors to consider if you decide on a policy with a maximum monetary benefit. At www.ltcfeds.com, you can compare costs by state.

And consider inflation protection; a $300,000 policy will have less buying power in 20 years.