Baby boomer couples can save money on health care by pooling their money to lower the cost of long-term care premiums. Instead of getting long-term care insurance for just one person, advisers and analysts say you can sometimes save money on premiums by getting it as a couple.
If you are willing to shop around, you might want to try these three things:
- Care plans for everyone
In general, sharing long-term insurance doesn't mean that both partners don't need to buy their own plans. But unlike traditional policies, these ones have a special rider that lets one spouse use the benefits of the other.
The main benefit of shared coverage is that if you need more than your current plan covers, you can get it from someone else. But what will happen if they both spend more than they were supposed to?
Experts say that won't always be a problem if you bought a contract with a lot of flexibility and terms that last for a long time. They say that some companies offer policies that can cover a person for their whole life. Most of the time, a longer time frame means higher rates. When compared to short-term plans that cover long-term care for three to five years, a policy that lasts for life can cost more.
Neil Gholson, President of LTC Finical Solutions, Inc., says, "That can defeat the whole point of getting a policy that lets you share benefits."
Neil says that you should have at least four years of coverage to make sure you don't run out of benefits. The senior policy analyst at Consumers Union says that's because long-term policies show that nursing homes are used on average for about 2.5 years.
"Very few people stay in a nursing home for more than five years," Gholson said. "So, if you want a long-term plan that lets you and your partner share care, look at a four-year term. Fewer years might not be enough, especially since policies can cover care at home or in a nursing home."
He also said that shared care policies might be best for couples who want to buy shorter-term plans but still want the freedom to use their spouse's benefits.
- Partnerships for long-term care
A programme that had been running for years in only a few states was made available to most of the country two years ago. It lets the total value of long-term care policies be counted toward Medicaid requirements for using personal assets to pay health bills.
But each state has its own circumstances. In New York, for example, people must buy long-term care insurance that covers at least three years in a nursing home and six years of care at home. Gholson says that in exchange, the state promises not to go after a person's personal assets once their private policy's benefits have run out.
"So Medicaid care becomes a benefit that is free and comes with no strings attached," he said.
Dollar-for-dollar protection is used in states like California and Connecticut. In these situations, the value of a private insurance policy is used to figure out how many assets are safe from Medicaid's "pay-down" requirements.
It saves the states money because they are now paying insurance companies for long-term care. And it puts less stress on the whole Medicaid system than what we have now.
For individuals, these kinds of partnerships can reduce the size of the insurance policies they have to buy. The trade-off is that if you buy less coverage than a state's minimum for Medicaid eligibility, you'll still have to use your savings.
"If you live in a dollar-for-dollar state, you might want to buy enough insurance to protect your whole portfolio in a partnership programme," Gholson said.
- Ask insurance agents about discounts for buying more than one policy at once.
It might be the easiest way to save money.
Some companies now offer discounts if two people buy a long-term care package together.
These are called "spouse discounts," and they can save you anywhere from 15% to 25% off your regular premiums. And if you are very fit and healthy, some insurance companies will give you an extra 10 percent off on top of that.
Things to think about:
Each of the three choices has its own problems. Cheryl Matheis, a health strategist at AARP, said, "People need to remember that the shared-care market is still pretty new." "They need to ask a lot of questions and look closely at each policy's details."
- Find out how often the insurance company has changed prices and policy terms in the past. Only a small number of carriers haven't raised rates.
- Shared long-term care benefits are likely to cost a little more than traditional long-term care policies with the same length of coverage.
If two people don't share long-term care insurance, they may have to buy more extensive individual policies to get the same level of coverage. The main benefit of shared care is that it makes policies last less time.
- If you're looking for a cheaper alternative, shared care is something you should at least think about.
- Gholson says that if you choose a state partnership programme, you need to know if there are any holes. Even getting enough private care insurance to match the amount of assets isn't a sure thing.
- If you have enough money, you should always buy separate plans with longer terms.
"The government might still be able to come after your assets, depending on where you live or move to and how you meet the Medicaid eligibility and income requirements in each state," Gholson said.
With the right amount of research, spouses who cut health care costs can get big benefits. Talk to a Long-Term Care Professional who works for more than one insurance company to find out what your options are.
