A long-term partnership policy may make home care more affordable

Over 90 percent of older Americans are lacking long-term care insurance. Premiums have skyrocketed over the last decade, and some insurers have exited the market. It has declined in popularity largely due to its unaffordability for many seniors.

Yet over 6 million seniors today are considered likely to have a "high need" for long-term care services, according to the U.S. Department of Health and Human Services. Around 54 percent of adults who are reaching age 65 now are going to need them. Moreover, Medicare doesn't cover nursing home care and Medicaid has strict income limits for eligibility.

How will we solve this seemingly intractable problem? How will "high need" seniors -- those who need daily assistance with two or more activities, or who have severe cognitive impairment -- get the long-term care they need?

The answer is almost certainly home-based care. According to current data compiled by the insurer Genworth, home-based nursing care is just over half the cost of a semi-private nursing home bed -- $46,332 per year as opposed to $82,128. What that translates to is about $3,861 per month for in-home care that provides 44 hours of services in a 7-day week.

The problem is that ordinary long-term care policies don't cover in-home care. However, there is a relatively new kind of policy that does. It's called a "qualified long-term care partnership policy."

Qualified long-term care partnership policies are available in most states, including Georgia. Their purpose is to pay for at-home care but not nursing home care.

Will you end up needing both, and therefore need to buy both types of policies? "That's not something we see in our data. For the most part, people are able to stay at home for the whole time," a spokesperson for Genworth told Kaiser Health News.

A qualified long-term care partnership policy is less expensive than a traditional long-term care policy, and for good reason. It offers less in benefits.

For example, Genworth quoted Kaiser a policy for an average Minnesota couple aged 55. Today, they would pay $2,380.05 per year in premiums and eventually receive about $4,000 a month in benefits for each person. The benefits would max out in three years. The average policyholder pays in for 10 to 20 years before getting those benefits.

Does this kind of policy make sense for everyone? No. "You absolutely need to know what the average home care and nursing home costs are for your state, to get a sense of what your exposure might be," says the director of the Connecticut Partnership for Long-Term Care. "If you don't buy meaningful benefits, you're wasting your premium."

That said, it's definitely something worth discussing with your attorney.

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