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Making Long-Term Care More Affordable

Long-term care insurance may seem like a wonderful thing to have -- until you do a little research into it. It's at that point, when you see what it can cost you, that it loses some of its appeal. The main reason it's so costly, of course, is because there's a good chance you'll need it one day!

Before I go any further, consider the possibilities. The cost of a nursing home can be several thousand dollars per month, totaling anywhere from $25,000 to $125,000 or more per year. Having at-home care can top $100 per day. Depending on your age and health, long-term care insurance premiums can be anywhere from around $500 to several thousand dollars per year.

Fortunately, there are ways to lower these premiums. And they're well worth looking into, because for many of us, long-term care insurance is well worth procuring. Here are some tips, from the American Association for Long-Term Care Insurance (AALTCI):

  • Being in good health when you sign up can cut your costs by 10% to 20% annually.
  • Married (and even simply cohabitating) people might reap 15% to 40% savings.
  • You can opt for a longer "elimination period." This is the period of time before the policy kicks in, when you pay for your own long-term care needs. Increasing it from 30 to 90 days can save 10% to 20% annually.
  • You can opt for a policy that will pay for less, and will cost less. For example, instead of covering your long-term care needs for an unlimited period, if you select coverage for up to five years, you can save 16% to 27% yearly.
  • You can save up to 8% per year just by sending in your payment in one lump sum once a year, instead of via monthly payments.

Learn more from the AALTCI and in the articles "Foolish Advice on Long-term Care Insurance" and "Long-Term Care Finale."

Keep learning
For more information about insurance in general, take a look at our Insurance Center. It may not be the most exciting topic in the world, but it's vital for many situations. You may not even have thought about things like disability insurance, but it can make a real difference in your financial plan. And, of course, properly insuring your property is essential too. Take a little time to learn more and if some calamity occurs in the future, you may be very happy you did.

These articles may also be of interest:

Finally, consider making some money in insurance, by investing in insurance companies. You could do so, for example, via the Fidelity Select Insurance (FSPCX) fund, which has racked up average annual gains of 14% over the past 10 years, topping the S&P 500 with holdings like AIG (NYSE: AIG  ) and MetLife (NYSE: MET  ) . For more on understanding how sector-based mutual funds can add to the success of your portfolio, try out the Fool's Champion Funds newsletter, which brings you information about top-notch funds in every issue.

Longtime Fool contributor Selena Maranjian appreciates your feedback.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 18, 2008, at 11:23 AM, bjackr wrote:

    Medicare Insurance At A Glance

    Medicare is a health insurance program established by the U.S. government for citizens 65 years of age or older. Its purpose is to provide an affordable health insurance solution for the elderly population so that they can receive the medical care they need. Here you will find basic information on eligibility requirements and the types of coverage offered, as well as resources to further research your Medicare options.

    Eligibility: To qualify for Medicare, you must be 65 years of age or older. The enrollment period for Medicare begins three months before the month of your 65th birthday and ends three months later. For example, if your birthday is June 1st, you are eligible to enroll between March 1st and September 30th of the year of your 65th birthday.

    Types of Medicare Coverage: Medicare is split into three parts-Part A, Part B, and Part D.

    Medicare Part A covers hospital expenses. For most Americans, this insurance is free since they have already paid for coverage through payroll tax deductions. You or your spouse must have 40 work credits (equal to approximately 10 years in the workforce) to obtain this coverage at no cost. For those individuals who have less than 40 work credits, coverage can be obtained at a premium based on any work credits you may have. It is advisable to enroll in this coverage as soon as you are eligible as it allows you to qualify for Medicare Part D.

    Medicare Part B covers doctor and outpatient services. There is a premium associated with this coverage. For 2008, the Medicare Part B premium is set at $96.40 per month for most individuals. It is important to enroll for this coverage as soon as you are eligible because there is a penalty if you enroll after the initial enrollment period. There is an exception but it is better to be safe than sorry.

    Medicare Part D covers prescription drug expenses. As with Part B, there is a premium and a penalty for not enrolling during the initial enrollment period. There is an exception to the penalty-if you already have prescription coverage that is considered to be as good as Part D, you will not be penalized for obtaining Part D when that coverage ends after the initial enrollment period.

    There are two ways to obtain Medicare. You can join the traditional, government-run Medicare program or you can elect to join a private Medicare insurance plan. There are pros and cons to both programs and it is prudent to research both options to find out which one is right for you.

    For more information on Medicare, use the following resources:

    AARP Medicare Information

    Center for Medicare & Medicaid Services


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