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As we age, the possibility of needing long-term care becomes more and more likely. But this care takes the form of a home caregiver who intervenes a few hours a day, an adult daycare center which provides supervision and day care or a nurse for 24 hour support, these services can be very expensive if you have to pay out of pocket.
For example, in 2024, the average annual cost of a private room in a nursing home exceeded $100,000 nationally. And the costs of this type of care can be even higher in some areas. Given the high average price, such long-term care costs can put a strain on your retirement savingsespecially since Medicare does not cover long-term care costs. In turn, many older adults find themselves looking for solutions to make this type of care more affordable.
A potential solution is long-term care insurance. This type of insurance coverage is designed to help cover costs associated with long-term care services. By paying premiums to an insurance company, you gain access to a pool of funds that can then be used to pay for eligible long-term care needs in the future. But long-term care insurance premiums are not cheap, especially if you buy it in your sixties. It may therefore pay to look for ways to reduce costs.
Find out here what the costs of your long-term care insurance cover could be.
5 ways to reduce the costs of your long-term care insurance at age 60
Before you try to cut the costs of your long-term care insurance, it is important to know what factors determine the cost of this type of coverage. The costs of a long-term care insurance policy generally depend on things like your age, health, and the level of coverage you choose.
In turn, purchasing a policy at a younger, healthy age will generally result in lower premiums. This is why many experts recommend at least exploring long-term care insurance options. in your late 50s or early 60s before premiums become prohibitive.
But there are ways to help make long-term care insurance more affordable – even if you buy it in your sixties. Here are five potential strategies to reduce costs:
Buy a policy earlier in your 60s
The costs of long-term care insurance are based largely on your age and your health when you first take out a policy. By purchasing a policy earlier in your 60s, such as at 62 or 63, you may be more likely to get lower premiums compared to wait later in this decade. Every year that you delay purchasing long-term care insurance, you risk premiums becoming more expensive due to your age and risk profile.
Compare your best long-term care insurance options online now.
Choose a longer waiting period
The waiting period The waiting period before your long-term care insurance benefits kick in to begin covering costs is primarily tied to your long-term care insurance policy. Policies often have waiting periods ranging from 0 days to 120 days or more. By choosing a longer waiting period, you may be able to lower your insurance premiums because you will assume more of the initial policy costs before the insurance kicks in.
Opt for a shorter duration of services
Long-term care insurance policies will cover care costs for a set period of time, such as three years, five years, or a much longer term. The shorter the benefit period you choose, the lower your premiums will generally be. Although a long or unlimited benefit period provides the most comprehensive coverage, a three-year benefit period can make your policy much more affordable and, depending on your needs, could be perfectly adequate in terms of coverage.
Limit inflation protection
Many long-term care policies have an option to protect against inflation This increases your benefit amount over time to keep up with the rising costs of long-term care. While this feature is very useful in today’s inflationary environment, it can also significantly increase your premiums. So if you want to save money on your policy costs, you may want to opt for lower amounts of inflation protection or remove it altogether to reduce premiums in the short term.
Consider a policy with a co-pay
Similar to health insurance policies, some long-term care insurance policies allow you to benefit from a co-payment amount, in which you pay a portion of the costs out of pocket and the insurance policy covers the rest . And, in general, the higher your co-pay percentage, the lower your insurance premiums will be. For example, a policy with a 20% co-pay will be less expensive than a policy with no co-pay.
So it might be a good idea to opt for a long-term care insurance policy with a co-pay to save money. Just make sure you have enough money saved to allow you to pay it out of pocket, if you need to use your long-term care insurance.
The essential
Ultimately, proper planning is essential when it comes to long-term care costs, as these costs can deplete your retirement savings if you have to pay out of pocket. By exploring options like long-term care insurance and finding ways to lower premiums, you can hopefully ease the burden of these expenses later in life. And, while some of these savings measures may reduce your long-term care insurance benefits in the future, they can make coverage much more affordable when purchasing an insurance policy in your 60s. . However, before taking these steps, it is essential to weigh your retirement budget, health and potential long-term care needs to find the right balance between coverage amounts and cost.
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