When Barry and Debbie Kay of Plantation reached their early 50s, they took a step to lock in their future independence: They bought long-term care insurance.
The parents of three grown children, Barry Kay said he and his wife wanted to make sure they had the freedom to make their own decisions about future care, if needed.
“We didn’t want to have to count on anybody else stepping in,” said Kay, 57, an optometrist. “We wanted to be independent.”
Freeing family members of the burden of being caregivers, protecting assets and maintaining independence are three common reasons that people buy long-term care insurance.
The insurance typically steps in when a person has cognitive impairment, or cannot perform “activities of daily living,” such as bathing, dressing, feeding and walking. It can be used after an acute illness, injury or surgery, and can cover care at home, an assisted living facility or nursing home.
At age 65, seniors have a 40 percent lifetime chance of a nursing home stay, according to the U.S. Department of Health and Human Services. For about 10 percent of the seniors, the stay will last five years or longer.
The average annual cost of nursing home care is $50,000 or more, according to America’s Health Insurance Plans. In South Florida, average costs are $16 to $19 an hour for home care, $1,850 to $4,400 monthly for assisted living, and $195 to $225 daily for a nursing home, according to the American Association for Long-Term Care Insurance.
“When we are doing a comprehensive financial plan for someone in their 50s, we examine long-term care to see if it’s right for them,” said Ana Maria Martinetti-Katz, a certified financial planner with Cathy Pareto and Associates in Coral Gables.
Individuals should expect to pay 5 to 10 percent of their income on long-term care insurance, and premium costs are rising, she said. In the past year, long-term care insurance policy premiums rose 6 to 17 percent, according to the American Association for Long-Term Care Insurance.
The rule of thumb is that people with assets of $250,000 to $2 million need to buy long-term care, Martinetti-Katz said. The thinking is that those with fewer assets can’t afford the insurance, and those with more can afford to pay for their own care.
“But that’s just a rule of thumb. If you have more than $2 million, you can afford to pay for your own care, but is that really how you want to spend your assets?” she said.
For the Kays, it was watching Debbie’s grandmother, who did have long-term care insurance and was cared for comfortably in her own home, that helped make their decision.
“We’d had advice from older people, who had been through it. We were at the right age, and we thought it made sense,” said Kay, whose wife, Debbie, 57, is a project manager for Family Central. “We knew the time was right.”
Sande Kaskel, owner of Kaskel and Associates in Hollywood, has sold long-term care insurance for more than 20 years. She began selling it in 1989 after her grandmother, who was in her 80s, needed care and the family had trouble finding qualified caregivers to go to her home.
“Look at healthcare costs, figure out how much you can afford to pay and go to a long-term care specialist or financial planner to help you find a policy that fits your needs,” Kaskel said. “Having a policy that pays 50 percent is better than nothing.”