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| Top 5 Reasons for Buying A Long Term Care Insurance Policy |
1. Protect Assets
2. Maintain Independence
3. Preserve Lifestyle
4. Afford Nursing Care
5. Choice of Services
2. Maintain Independence
3. Preserve Lifestyle
4. Afford Nursing Care
5. Choice of Services
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What is long-term care?
Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or
disabilities. There are three levels of long-term care:
- Skilled care: Generally round-the-clock care that's given by professional health care providers such
- as nurses, therapists, or aides under a doctor's supervision.
- Intermediate care: Also provided by professional health care providers but on a less frequent basis
- than skilled care.
- Custodial care: Personal care that's often given by family caregivers, nurses' aides, or home health
- workers who provide assistance with what are called "activities of daily living" such as bathing, eating,
- and dressing.
Long-term care is not just provided in nursing homes--in fact, the most common type of long-term care is
home-based care. Long-term care services may also be provided in a variety of other settings, such as
assisted living facilities and adult day care centers.
Why is it important to plan for long-term care?
No one expects to need long-term care, but it's important to plan for it nonetheless. Here are two important reasons why:
The odds of needing long-term care are high:
- Approximately 40% of people will need long-term care at
- Approximately 14% of people age 71 and older have
need for nursing home care**
- Younger people may need long-term care too, as a result
The cost of long-term care is rising:
Currently, the average annual cost of a 1-year nursing home stay is $72,270* and in
many states the cost is much higher. In the future, long-term care is likely to be even
more expensive. If costs rise at just 3% a year (a conservative estimate), in 20 years,
a 1-year nursing home stay will cost approximately $130,528.
*National Clearinghouse for Long-Term Care Information, U.S. Department of Health
and Human Services, 2009
**Alzheimer's Association, 2009
Doesn't Medicare pay for long-term care?
Many people mistakenly believe that Medicare, the federal health insurance program for
older Americans, will pay for long-term care. But Medicare provides only limited coverage
for long-term care services such as skilled nursing care or physical therapy. And although Medicare provides some home
health care benefits, it doesn't cover custodial care, the type of care older individuals most often need.
Medicaid, which is often confused with Medicare, is the joint federal-state program that two-thirds of nursing home residents
currently rely on to pay some of their long-term care expenses. But to qualify for Medicaid, you must have limited income and
assets, and although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in
certain states.
Can't I pay for care out of pocket?
The major advantage to using income, savings, investments, and assets (such as your home) to pay for long-term care is that
you have the most control over where and how you receive care. But because the cost of long-term care is high, you may
have trouble affording extended care if you need it.
Should I buy long-term care insurance?
Like other types of insurance, long-term care insurance protects you against a
specific financial risk--in this case, the chance that long-term care will cost more
than you can afford. In exchange for your premium payments, the insurance
company promises to cover part of your future long-term care costs. Long-term
care insurance can help you preserve your assets and guarantee that you'll have
access to a range of care options. However, it can be expensive, so before you
purchase a policy, make sure you can afford the premiums both now and in the
future.
The cost of a long-term care policy depends primarily on your age (in general, the
younger you are when you purchase a policy, the lower your premium will be), but
it also depends on the benefits you choose. If you decide to purchase long-term
care insurance, here are some of the key features to consider:
- Benefit amount: The daily benefit amount is the maximum your policy will pay for your care each day, and generally
ranges from $50 to $350. - Benefit period: The length of time your policy will pay benefits (e.g., 2 years, 4 years, lifetime).
- Elimination period: The number of days you must pay for your own care before the policy begins paying benefits (e.g.,
20 days, 90 days). - Types of facilities included: Many policies cover care in a variety of settings including your own home, assisted living
facilities, adult day care centers, and nursing homes. - Inflation protection: With inflation protection, your benefit will increase by a certain percentage each year. It's an optional
feature available at additional cost, but having it will enable your coverage to keep pace with rising prices.
Your Long Term Care Insurance Advisor at The Insurance Suite can help you compare long-term care insurance policies and
answer any questions you may have.
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