In many ways, all healthcare policies are a gamble. Policy holders pay monthly premiums regardless of health, which means that a healthy individual actually loses money on his policy. Financially, this may seem like an unnecessary gamble, but insurance is the price we pay for security - so we can be prepared for the worst if it should arise.
Unfortunately, many policyholders don't realize they have chosen the wrong plan until it's too late. Perhaps a deductible is too expensive or your HSA funds didn't roll over as you expected. There are also extreme cases of terminal diseases remaining uncovered under some policies. With so many options, how can you know what policy is the best for you?
Many of us can be reluctant to change our policies, but as we grow older, our health becomes a primary concern. There are suddenly things that we must consider such as the possibility of long-term care, cancer policies or hospital confinement policies. Unfortunately, in many cases insurance gaps aren't noticed until the coverage is needed - and isn't there. When an insurance policy fails to cover the unexpected problems in life, the emotional and financial strain can make a health crisis much worse.
What is your family's medical history?
If your family has a history of heart disease, cancer or another major illness, you should consider an additional policy or policies to cover costs such as major exams, treatments, surgeries, travel and lodging, loss of income, out-of-network specialists and deductibles. These policies supplement traditional HMO, PPO and HSA policies to provide extensive coverage in the case of a medical emergency. For those who have a family history of such illness, the greater gamble is to be diagnosed with a major illness and have insufficient coverage.
Do you have a long-term care plan?
For many, the life of retirement is full of joy and relaxation, but sometimes unexpected medical problems can disrupt your golden years. The onset of Alzheimer's disease or a stroke can require custodial care over a number of years, the costs of which can eek away at a savings plan and diminish your family's assets. The cost of long-term care is extraordinarily expensive, and currently 9 million U.S. adults need some type of long-time care.
For those who reach the age of 65, there is a 40% chance of living in an assisted living community or nursing home. Many of those who require long-term care will fall into poverty trying to keep up with medical expenses, and though Medicare and Medicaid can assist with some costs, these plans are also limited.
Long-term healthcare is offered by private companies, but the premiums are high and often unstable. For example, you may pay upwards of $3,000 per year, depending on your age and health, only to be subjected to premium hikes in later years. Because such premium hikes are common, advisors suggest that those who are budgeting for long-term care include a 50% variable to cover an increase in costs.
Long-term care is often capped after three years, and while the average stay in a nursing home is 2.5 years, 10% of seniors in nursing homes stay for 5 years or more. The cost of in-home health aides is also expensive, currently averaging at $20 per hour. Many seniors report that the high premium costs are the main deterrent to purchasing long-term care insurance. While it is less expensive for younger individuals and couples to purchases these premiums, they will spend more in the long-term paying high rates and may never cash in on the policy.
For seniors, settling on a long-term health care plan is imperative to preserving assets. The gamble of long-term healthcare insurance is that it could be an expensive investment that never pays off. A second gamble is that the investment could become too expensive to afford. However, in order to pay for a three-year stay in the average American retirement home ($50,000 per year); it would cost an individual $4,800 per year for 31 years to be able to pay for the stay completely out of pocket.
And the actual cost in 5-10 years will be much higher - with an adjustment of 5% per year for inflation. While no one wants to make the gamble that they will be living in a nursing home during old age, for those who can afford the payments, the gamble could pay off - preserving your savings and assets for future generations.
Anytime you are interested in changing your policy, pick up the phone and call your provider. It is also important to talk to more than one agent at different companies. This will allow you to understand the full-range of options. Bring your family into the conversation as well to discuss concerns and benefits of long-term decisions that will affect their finances.
Brenda Watson is a former HR coordinator who currently writes for healthinsurancequotes.org. When she's not writing, you can find Brenda quilting or baking casseroles. To reach Brenda, you can leave her a comment! She loves hearing from readers.