Long-term Care Insurance

Over the age of 65? More than likely you will need long-term care. This care helps people with chronic illnesses, disabilities, or other conditions meet their daily needs over. Nurses, physical therapists, and other professionals assist these people with their activities of daily living (ADLs), which may include bathing, dressing, eating, using the bathroom, and specialized medical care.

Unfortunately, most employer-based health plans will not cover long-term care services and Medicare can only cover at-home care or nursing home care for a short period of time. To help cover future long-term care expenses, you can consider purchasing long-term care insurance (LTCI), which would help pay for care services at home, in an assisted-living facility, or at a nursing home.

The costs of long-term care are increasing every year. Individuals and families may pay thousands of dollars per month to take care of their beloved ones. According to the U.S. government, nearly 70% of people age 65 and over will require long-term care at some point in their lives.² If you would like to protect you and your family from the potentially high costs of long term care with long-term care insurance.

1. http://longtermcare.gov/the-basics/

Who should purchase long-term care insurance?

• You have a small retirement savings account
• You have chronic medical conditions that will make it difficult to perform activities of daily living in old age
• You have a genetic predisposition for developing medical conditions that lead to severe cognitive impairment (Alzheimer’s, dementia, Parkinson’s)
• You don’t want to impose the hardship of care onto your family

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What does long-term care insurance cover?

• At-home skilled nursing care
• Assistance with activities of daily living
• Assisted living facilities
• Nursing homes
• Specialized care facilities (for particular medical conditions such as Alzheimer’s)
• Hospice care
• Occupational and physical therapy

How do I receive the benefits?

Insurance companies may use benefit triggers to determine when you can be eligible for benefits. They are usually defined by your ability to perform ADLs or certain cognitive impairments.

• For example, a policy may kick in when you need daily assistance with at least two of six ADLs as specified by the policy.
• ADLs include eating, bathing, dressing, using the toilet, transferring in/out of bed, incontinence care
• Benefits usually have a pre-set daily limit or a lifetime maximum payout

In addition, the policy may specify an elimination period, which is the amount of time that needs to elapse after a benefit trigger before an individual can begin receiving payment for long-term care services.

• Elimination periods are similar to insurance deductibles, but are measured by time instead of dollar amounts
• Elimination periods can last 30, 60, or 90 days
• During this period, the individual is responsible for the cost of any long-term care services received
• Certain requirements may need to be satisfied during an elimination period before receiving benefits, such as receiving paid care or paying for services during the elimination period

Am I already covered for long-term care under Medicare/private insurance?

Unfortunately, Medicare and many private insurance plans are not complete:

• They only cover skilled, short-term, medically necessary care (having nurses perform injections, assist patients in taking medications, etc.)
• Usually, plans do not include support for ADLs and custodial/personal care
• May only cover skilled nursing facility stays following a recent hospitalization and only for a maximum of 100 days
• Still require individual to make copayments or meet a deductible for long-term care services

What would prevent me from qualifying?

• Are currently using long-term care services
• Already require assistance for ADLs
• Already have chronic medical conditions such as Alzheimer’s, AIDS, or Parkinson’s
• Had a stroke within past year or two years, or any history of stroke
• Already have cancer that has spread beyond original site
• Other debilitating health conditions

What should I consider before buying long-term care insurance?

• Be sure you can afford the long-term care plan over time, you may pay premiums for 10 – 30 years before receiving any benefits
• If you stop paying premiums later on, because you can’t afford it, you could forfeit any and all future benefits that you would have received
• If you stop paying premiums, having a “non-forfeiture option” in the policy would allow you to still receive benefits based albeit at a reduced payout, based on the amount of premiums you have already contributed to the policy
• If you are relatively young when you purchase long-term care insurance, you should factor in inflation to ensure your benefits can keep up with the rising costs of long-term care in the future

What are the costs of long-term care insurance?

Costs vary based on:

• Age at time of purchase, the older you are the more expensive the monthly premium
• Length of elimination period, the shorter the elimination period the higher the monthly premium
• How the benefit triggers are defined, the stricter the definition (needs assistance with 3 out of 6 ADLs, vs. 2 out of 6) the lower the premium.

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