What is meant by long-term care?
Long-term care includes both medical and non-medical services for people who have an ongoing illness or disability. Most long-term care helps people with the basic day-to-day activities, such as dressing, bathing and using the bathroom. Long-term care can be delivered in the home, through adult day care, or in an assisted living facility or nursing home.
What are the chances that I will need long-term care?
About 70 percent of those over age 65 will need some kind of long-term care during their lifetime, according to the Department of Health and Human Services. It’s important to keep in mind that age is not the sole factor when considering the possibility of needing long-term care. About 40 percent of those who receive long-term care are between 18 and 64.
Who provides long-term care?
Providers of long-term care include family members, community-based services, home health care businesses, housing for aging and disabled individuals, board-and-care homes, assisted living facilities, continuing care retirement communities and nursing homes.
What does long-term care cost?
Rates vary considerably by region. According to Consumer Reports, for assistance from an aide in your home, the average rate was about $30 per hour in 2008. The national average cost for a one-bedroom assisted living apartment was $5,200 per year in 2008. The cost of long-term are is predicted to increase at least 5 percent per year into the future.
Doesn’t Medicare or Medicaid pay for long-term care?
Medicare does pay for short-term, medically necessary skilled nursing care in a facility or in the home, if you meet certain requirements, but after a month or two, the benefits are usually capped. In general, Medicare doesn’t pay for long-term, non-skilled “custodial care,” ― care that helps with daily living activities, such as eating, dressing and walking. Also, keep in mind that Medicare Supplement Insurance does not cover long-term care expenses either.
Medicaid does pay for certain health services and nursing home care for elderly people with low incomes and limited resources. Eligibility and the allowable services differ from state to state. In general, you must use up most of your personal savings and assets before you become eligible. According to the AARP, millions of people have too much money to qualify for Medicaid assistance, but not enough money to afford the types of services they need.
When does long-term care insurance make sense?
If your net worth is below $250,000, not including your home, a long-term care policy won’t be an affordable option for you. On the other hand, if your assets top $2 million, you can most likely pay for the care yourself. About 65 to 80 percent of Americans fall between those two extremes.
Also, look to your family history to consider the odds of needing years of long-term care. If Alzheimer’s, diabetes or living into the 9th decade runs in your family, the chances for needing long-term care increases. On the other hand, if your direct relatives have died of heart disease or cancer, the chances you’ll need long-term care decrease.
What are the advantages of long-term care insurance?
In general, long-term care insurance covers a wide range of care scenarios, including home care, assisted living facilities, adult daycare, respite care for caregivers, hospice care, nursing homes and Alzheimer’s facilities so that you can choose the type of care that’s needed.
Another benefit is that people needing long-term care do not need to rely solely on family caregivers. It also keeps the patient from having to “spend down” their assets to qualify for government assistance programs.
What is the downside of long-term care insurance?
This type of insurance is expensive, especially when you consider you’ll be paying monthly premiums for decades before you will need to use it. The average long-term care claim is filed at age 79. Of course, there is also the chance you will never need to use it.
If you stop paying the premiums ― either due to rising premiums or decreasing income ― you could be forced to drop the policy and lose all the money that you’ve paid.
When the time comes to use your insurance, you might not be able to meet the requirements for the benefits. Most policies require that you are unable to perform two or more “activities of daily living,” such as bathing, eating, moving from bed to chair or using a toilet. Sometimes it is the insurer’s physician ― not your own ― who decides whether you are able to perform these activities.
You should be aware that long-term care insurance rarely covers all the costs of care. For example, policies come with “elimination periods,” which act like deductibles. The shorter the elimination period (1 to 120 days), the more you’ll pay in premiums. Like a deductible, you must cover the costs incurred during the elimination period yourself.
At what age should you consider buying long-term care insurance?
Most financial planners agree that the best time to look for a long-term care insurance policy is when you are in your late 50s or early 60s. Most people who sign up for this kind of coverage are 61. By waiting until later in your 60s, there can be problems in qualifying for the insurance and/or the cost of the premiums becomes prohibitively expensive. According to Consumer Reports, almost a quarter of those applying in their 60s aren’t able to pass the physical and almost half of people in their 70s fail the physical.
What should I consider when choosing a long-term care insurance policy?
Buying a long-term care insurance policy is a serious financial investment and should be part of a comprehensive estate plan. Several policies should be compared side by side in detail. If a policy seems inexpensive by comparison, it should be evaluated cautiously. There may be clauses in these contracts that limit coverage.
It makes sense to consider only those insurance companies with an A.M. Best rating of A++ or A+. This rating denotes the highest degree of financial strength. These companies’ policies may be more costly, but there is a much better chance their rates won’t skyrocket, and that they will be in business 10 to 30 years from now when you need to use the policy.
A qualified, independent professional should review any policy before purchase. The state health insurance assistance program (SHIP) is also a good resource (http://www.shiptalk.org/Public/home.aspx?ReturnUrl=%2fDefault.aspx). The federal government’s Health and Human Services Web site also provides useful information (http://www.medicare.gov/LongTermCare/Static/Home.asp)