Sometimes it pays to be a woman, but not when it comes to long-term care insurance.
Rates started rising for women last year after the long-term care insurance industry discovered that two-thirds of claims paid were for women. Now the average 55-year-old woman pays $1,225 annually for $164,000 in coverage compared with $925 for a man with the same coverage, according to the American Association for Long-Term Care Insurance.
On average, women are paying 12 percent more than last year, according to a recent association report, while rates for men actually dropped.
Long-term care insurance helps cover the cost of assistance with daily activities such as washing, dressing and bathing that Medicare does not cover. long-term care insurance can pay for a range of services from a home health aide to skilled nursing care.
The long-term care insurance industry recently started raising its rates after sustaining substantial losses caused by incorrect assumptions about future interest rates and consumer behavior. Record-low interest rates in recent years mean the premiums the industry invested did not earn adequate returns to cover claims costs.
Also, industry experts expected 4 percent to 5 percent of customers to voluntarily allow their policies to lapse, according to long term care association executive director Jesse Slome. But since only 1 percent of customers chose to drop their policies, the industry is paying out on more policies than expected.
Compounding these problems is the rising cost of long-term care, which currently is outpacing inflation. For example, the cost of a one-bedroom assisted living facility unit rose on average 4.26 percent from 2008 to 2013, according to the Genworth 2013 Cost of Care Survey. But the consumer price index rose just 1.64 percent per year in the last five years.
Failing to plan for these expenses can easily wipe out one’s life savings. The U.S. Department of Health and Human Services estimates that 70 percent of seniors 65 and older will require some
sort of long-term care service. So, more likely than not, you or your spouse will need a plan to cover these costs.
If your long-term care insurance premium is stressing your budget, you may be able to renegotiate your policy to lower your premium, but you may also qualify for other forms of government assistance that can help you pay for long-term care.
A qualified elder law attorney can work with you to determine if you are eligible for Medicaid or Veterans Aid and Attendance benefits. By getting to know you, your family, your goals, and your concerns, your attorney can develop a plan specific to your situation.
Your attorney can conduct a thorough analysis of your current medical needs, sources of income, insurance policies and other assets available to cover future costs of living and costs of care. Income and assets have a significant effect not only on your family’s ability to cover costs of care and other expenses but also on eligibility for key government benefits.
If, based on all the information gathered and reviewed, you are or could be eligible for benefits to help cover the cost of care, your elder law attorney can use that information to tailor your plan.
Whether you qualify for government assistance, speaking to a qualified attorney will give you peace of mind. You’ll feel much better knowing that you have left no stone unturned in putting together the best plan for yourself or your loved one and that you will have the care you need for now and in the future.
Michael Smith and Richard Barid are co-founders of Savannah-based Smith Barid LLC, which specializes in elder law, estate planning and special needs planning. They can be reached at 912-352-3999 or richard@smithbarid.com or msmith@smithbarid.com.