It’s the financial protection that many will need in retirement but few are willing or able to buy. Long-term care insurance scares off most people because of the cost.
For married couples, an increasingly popular option called ‘‘shared care’’ may make it more feasible by providing expanded coverage for less money than would otherwise be the case.
Under these joint policies, couples purchase a combined pool of benefits that can be used by either or both spouses. Like most everything in the world of long-term care insurance, it’s complicated. But what’s clear is that fast-rising costs have made shared care a more appealing option.
Q. What does long-term care insurance cover?
A. It pays for personal care received at home, assisted-living facilities, adult day care or nursing homes. Benefits typically kick in when a person needs help performing at least two of the basic activities of daily living, which include bathing, dressing, eating, transferring to and from a bed or chair, and using the toilet.
Q. Who needs it?
A. Long-term care insurance is considered essential for those who can afford it but don’t have the resources to pay for years of future care. Health insurance and Medicare do not cover long-term care needs. And the financial burden is heavy for those without coverage. A semiprivate room in a nursing room costs an average of $76,285 a year, an assisted-living facility runs $40,200, and a year of part-time home care typically ranges from $18,000 to $25,000, according to the insurance association.
Q. How does shared care work?
A. Instead of purchasing a future pool of benefits for each spouse, the policies are combined into a pool they can each use. So, buying a three-year shared care policy each gives a couple up to six years of benefits; each buying a five-year policy gives them 10. If one spouse develops a need for extended long-term care, such as from Alzheimer’s or a stroke, he or she could access most or all of the benefits. And if one dies without having used any coverage, the full benefits generally transfer to the surviving spouse.
Q. So what’s the typical overall cost?
A. Let’s use as an example a 55-year-old couple in good health who purchase a fairly representative amount of insurance with a current value of about $200,000 — or a $180 per-day benefit for three years each of future coverage including 3 percent compound inflation growth. They would pay an average yearly premium of $1,950 for two standard policies without shared care, according to the American Association for Long-Term Care Insurance.
Attaching a shared-care rider would push the cost to $2,260. But it could save them money by ensuring that one can get five or six years of coverage if needed — more than the length of the policy. Couples over 60 or 65 will pay significantly more.