Money, Health, and Other Things

Educational Blog in the Area of Family and Consumer Sciences for the Middle Peninsula

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Risk Management and Insurance Basics, Part XVI

This week, we’ll conclude our discussion on long-term care insurance.

How much does long-term care insurance cost?

According to the American Association for Long-Term Care Insurance, annual premiums purchased at age 55 average around $2000 a year, or $3000 for a couple. However, this can range from below $1000 to more than three times the average cost depending on a variety of features.

Premiums are generally paid for the rest of the policy holder’s life, but some policies allow premium payments for shorter periods, like 10 years. These policies, however, will generally have higher premiums.

Age is another factor that impacts premium cost – the later you get a policy in life, the more expensive the annual premiums will be. With that said, it’s typically not recommended to look into Long-Term Care Insurance until you’re in your mid-50s or else you may be paying those annual premiums for a very long time.

Many policies will state a benefit amount, often as a maximum amount per day. The higher the daily coverage, the more expensive the policy.

Many long-term care policies include waiting or elimination periods, the period you have to wait until receiving benefits. As we’ve discussed in previous weeks, the longer the elimination period, the lower the premium.

Many policies will have options for inflation protection, offering you an increase in maximum benefit amounts each year. The better protected your policy is from increasing long-term care costs, the more expensive the policy will generally be.

Does everyone need long-term care insurance?

At the risk of sounding like a broken record, whether or not long-term care insurance makes sense for you depends on your personal approach to risk management and your current financial situation. Those with few or no assets, and those who cannot afford long-term care premiums, may plan to apply for Medicaid coverage of long-term care cost and/or depend on family member for care taking. Those with very significant assets, who prefer to retain risk, may choose to self-insurance, paying any future long-term care expenses out of pocket. For others who can both afford the long-term care premiums and would prefer to transfer that risk, long-term care insurance may make sense.

That concludes our sixteen (!!) part discussion on insurance, feel free to go back and check out any of the previous parts you may have missed and let us know your thoughts and if you have any suggestions for future topics!


Risk Management and Insurance Basics, Part XV

Over the next two weeks, we’ll discuss long-term care insurance.

What is long-term care insurance?

Long-term care insurance is an insurance policy that helps cover the cost of home health care and nursing home stays. According to the U.S. Department of Health and Human Services, someone surviving to age 65 has about a 70% chance of needing long-term care as they age, with 24% requiring long-term care for more than two years.

You may be thinking, wait, won’t I have Medicare (a federal health insurance program for people 65 and older) when I retire? While it’s true that anyone 65 and older that has paid Medicare taxes for at least 10 years, which is part of the FICA taxes automatically taken out of your paycheck, will be eligible for Medicare, Medicare will often not pay for home health care or nursing home stays. Medicare may pay for “skilled” nursing care, however, more often than not, long-term care stays are considered “unskilled” or “custodial”. Medicaid, which is a public health insurance program for low income households, may pay benefits for nursing home stays at a Medicaid approved facility, however, this program is only eligible for those with few or no assets – with applicants only allowed their primary residence (up to a certain value), one vehicle, no more than $2000 in countable assets, and a few smaller exceptions.

With a long-term care policy, when am I eligible to receive benefits?

Required assessments are typically made prior to benefit payments. These assessments generally look for one of two things:

– Are substantial services required to protect the individual from threats to health and safety due to substantial cognitive impairment, such as late-stage Alzheimer’s disease?

– Is the individual unable to perform two of the seven “activities of daily living” for at least 90 days due to loss of functional capacity? These activities include eating, walking, moving from a bed to a chair, dressing, bathing, using a toilet, and bladder and bowel control issues.

We’ll return next week to conclude our discussion on long-term care insurance.

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[Replay] Three Things to Know about Well Water, Upcoming Well Water Clinic!

This week we’ll replay a previous post on three things to know about well water, and be sure to check out information on our upcoming Well Water Clinic!

1.  We’ve heard a lot about lead in drinking water in the last few years, but what you may not know is that it is incredibly rare for lead to be naturally found in groundwater. Instead, water that is either too low in pH and/or has other corrosive elements, is leaching lead from plumbing components. Water doesn’t have to be all that corrosive or acidic to leach metals from your plumbing either; it’s generally recommended that drinking water have a pH above 6.5 to prevent corrosion, which means regular rain water, for instance, is more than acidic enough to leach metals from your pipes! Now you may be thinking, ‘I don’t have an older home and I don’t have lead pipes, this shouldn’t be a concern for me.’ However, lead solder was allowed in homes until 1986, and “lead-free” brass fittings and fixtures could have up to 8% lead in them until 2014, when new regulations reduced the allowable level to 0.25%.

2.  There are quite a few different sources of potential contaminants to drinking water; surface contaminants could be getting into your drinking water, especially if the well head or grouting is not well maintained, metals could be leached from your plumbing, sodium may be added from your water softener, and many contaminants come naturally from the groundwater if they aren’t addressed with treatment devices.

3.  How often should you test your drinking water? Generally, it’s recommended to test for bacteria annually, and do more comprehensive tests every three years or so, including testing for pH, total dissolved solids and other local concerns. Testing is particularly important since some of the contaminants most detrimental to your health, like E. coli, nitrates, and lead, may be at high enough levels to cause serious health issues without you ever noticing a different smell, taste, or appearance.

If you’re interested in getting your well water tested, please check out the flyer below and contact Glenn Sturm (me!) and or 804-815-9458!

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Risk Management and Insurance Basics, Part XIV

This week, we’ll discuss umbrella insurance.

Unlike most of the insurances from our previous weeks, many people are unfamiliar with umbrella insurance.

Umbrella insurance provides supplemental liability insurance. As an example, let’s say you cause a bad 10-car pileup. Let’s say you have $500,000 in liability coverage through your auto insurance policy. If you’re liable for $800,000 of injuries to the other drivers and passengers, while your policy will cover the first half a million dollars, what about the other $300,000? If you have no umbrella insurance, you would be personally liable! Umbrella insurance can provide supplemental liability coverage to auto, home, and other liability insurances, as well as some policies providing coverage for liability related to libel, slander, false imprisonment, boat or aircraft accidents, and damages caused on another’s property. Liability coverage for service on a non-profit board may be covered as well.

Typically, insurance companies will require you to have certain minimum coverage amounts for your auto and home liability insurance policies. For instance, it’s not uncommon for an umbrella insurance policy to require you to have at least $300,000 or $500,000 of liability coverage on your auto insurance policy.

Umbrella insurance is generally sold in increments of $1,000,000 of coverage, with the first million dollars generally costing $150-$400 a year.

Should everyone have umbrella insurance? This largely depends on your risk management preferences – while liability claims above the maximum available coverage for auto and home insurance policies are rare, they do happen. There are also other considerations depending on your personal situation. Do you have significant assets that you’d like to protect in the event of an expensive lawsuit? Are you at a higher risk of being sued? Unfortunately, higher earning careers, like doctors and professional athletes, are more frequently targets of lawsuits. Are there other liability risk factors like renting out your property, having a trampoline, pool, or hot tub, frequently hosting large parties, or having teenage drivers in the household?

If you do decide to purchase umbrella insurance, be sure to shop around and be sure the policy covers what you need it to cover. Check if you’re able to receive significant discounts by bundling with a current insurance property policy.

That concludes our discussion on umbrella insurance, next week we’ll return and discuss long-term care insurance.