Paying for Home Care: Shared Care Insurance the Next New Solution?

With financial woes looming for many people approaching retirement age, many are wondering how they will pay for long term health care costs. A relatively new form of long term care insurance is starting to gain interest, a Businessweek article wrote this week. This increasingly popular option, “shared care,” makes that long term care insurance more feasible by providing expanded coverage for couples at a lesser cost than other options offer, Businessweek writes. 

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. New long-term care insurance policies cost 30 percent to 50 percent more than five years ago, according to the American Association for Long-Term Care Insurance.

“When I explain how it works and what you get, most people like shared care a lot,” says Brian Varian, long-term care insurance consultant for insurance brokerage Marsh Inc. in Woodland Hills, Calif. “It’s very favorable for couples.”

A look at the shared-care option within the broader context of changing long-term care insurance…

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: Does it cost extra?

A: Shared care costs more than separate policies with the same benefit period. But it can allow you to buy a shorter, less expensive policy, knowing that there ultimately is a larger combined pool of benefits to draw from.

For example, two typical three-year policies with the shared care rider will cost roughly 14 percent to 17 percent more than two separate three-year policies, according to Jesse Slome, the insurance association’s executive director. But that could still be more cost-effective in the long run by ensuring that one of them can get as much as six years of coverage if needed — double the length of the policy…. 

For more Q&A, read the full Businessweek article.  

Written by Elizabeth Ecker

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