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FAQ Long Term Care
Get a better understanding of Long Term Care Insurance
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What is Long Term Care?
- Long-term care refers to the many services beyond medical care and nursing care used by people who have disabilities or chronic (long-lasting) illnesses. Long-term care insurance helps you pay for these services, which can be very expensive. A policy also ensures that you can make your own choices about what long-term care services you receive and where you receive them.
- Long Term Care involves a wide variety of services for people with a prolonged illness, disability or cognitive disorder (such as Alzheimer's disease). Long term care is not one service, but many different services aimed at providing people with the help they need when a prolonged illness or disability keeps them from being able to care for themselves. It can range from help with day-to-day activities in the home (custodial care such as dressing, preparing meals, bathing, etc. ) to more sophisticated services such as skilled nursing care in your home or a nursing facility.
- Persons with physical illnesses or disabilities often need hands-on-assistance with activities of daily living. Persons with cognitive impairments generally need supervision, protection or verbal reminders to accomplish everyday activities. Skilled care and personal care remain the most common terms used to describe long term care and the level of care a person may need.
- Skilled Long Term Care is generally needed for medical conditions that require care by skilled medical personnel, such as registered nurses or professional therapists. This care is usually provided 24 hours a day, is ordered by a physician, and involves a treatment plan. Skilled care is generally provided in a nursing home, but may also be provided in other settings such as the patient's home with help from visiting nurses or therapists.
- Personal Long Term Care (also known as Custodial Long Term Care) helps a person perform activities of daily living, which include assistance with bathing, eating, dressing, using the toilet, continence and transferring. It is less intensive or complicated than skilled care and can be provided in many settings, including nursing homes, adult day care centers or at home. Top of FAQ LTC
Why Should I Consider Long Term Care Insurance?
- If you're like most consumers, you've set aside money for a rainy day. But you probably haven't protected your savings against the expense of an extended illness or disability. You should take action now, because the likelihood of needing such long term care is significant and the cost is high. A study reported by the New England Journal of Medicine in 1992 anticipates that 43% of people over age 65 will enter nursing facilities during their lifetime. More than half of the people in a nursing facility stay more than one year.
- Currently, the cost of a year in a nursing home averages about $38,000.¹ In addition to nursing facilities, many people will need long term care services in their home, or community services in adult day care centers. It has estimated that 80% of all people age 65 will need either nursing facility services or home or community services during their lifetime.
- Long term care insurance is the most efficient means of protecting your assets from this threat. When you purchase a long term care insurance policy, you not only help safeguard your assets from the cost of long term care, but you increase your independence and control over future needs.¹ American Health Care Association study, 1993 Top of FAQ LTC
Who Pays for Long Term Care?
- Nationally, one third of all nursing home expenses are paid out-of-pocket by individuals and their families, and about half are paid by state Medicaid programs.¹ Medicare, Medicare Supplement Plans, Medicare HMO's and traditional health insurance plans are designed to pay for hospital and doctor costs, not to pay for long term care services. In fact, Medicare pays only about 10% of all long term care costs (including only 5% of all nursing facility expenses).
- A study performed by the Health Care Financing Administration, which administers Medicare, showed that the majority of nursing facility costs were paid with the personal assets of the individual receiving the care, or by Medicaid if the individual had no personal assets. To receive Medicaid assistance, you must meet federal poverty guidelines for income and assets on health care. When you have spent down your assets, you then will be eligible for Medicaid. Thus, many people begin paying for nursing home care out of their own pockets and are forced to spend down their financial resources until they become eligible for Medicaid. ¹American Health Care Association study, 1993
- Ordinary health insurance won't cover it. People are living longer and longer these days. That's good news, but the flip side of that is there are more years in which there's a risk of serious health problems. And that could literally cost all of your remaining life's savings. Unfortunately, ordinary health insurance policies and Medicare usually do not pay for long-term care expenses. Medicaid, a federal/state health insurance program, will only pay for long-term care if you've already spent most of your savings or other assets. So, there's long-term care insurance. Top of FAQ LTC
What does Long-term care insurance typically cover?
- Help in your home with daily activities like bathing, dressing, eating and cleaning.
- Community programs, such as adult day care.
- Assisted living services that are provided in a special residential setting other than your own home. These services may include meals, health monitoring, and help with daily activities.
- Visiting nurses.
- Care in a nursing home. Top of FAQ LTC
How Much Does Long Term Care Cost?
- If you don't have insurance, long term care can be expensive, depending upon the amount and type of care needed and the setting in which it is provided. Currently, the cost of a year in a nursing home averages about $38,000.¹ This cost is only an average and varies widely across the country. If you receive skilled nursing care in your home and are visited by a nurse three times a week for two hours per visit for the entire year, the bill would come to about $12,300.¹ If you receive personal care in your home from a home health aide three times a week for a year, with each visit lasting two hours, the bill would amount to about $8,400.¹¹ American Health Care Association study, 19933 Top of FAQ LTC
When is the right time to buy a policy?
- Many people don't think about long-term care until they get into their 70s and 80s and their health begins to fail. At these ages, you may be too high a risk for an insurer to cover you; or if you do qualify, the premiums can be astronomical. In fact, some long-term care policies have restrictions on age and health status.
- The best time to buy long-term care insurance may be middle-age. It's the time when you have the highest likelihood of being eligible for a policy and, just as important, when premiums costs might be lower. Top of FAQ LTC
What are some key issues I need to know?
- Coverage. You can choose long-term care policies that pay only for nursing home care, or only for home care. Or, you can opt to purchase coverage for a mixture of care options that includes nursing home, assisted living, and adult day care. Some will pay for a family member or friend to care for you in your home.
- Daily or Monthly Benefit. The daily or monthly benefit is the amount of money the insurance company will pay for each day or month you are covered by a long-term care policy. If the cost of care is more than your daily or monthly benefit, you will need to pay the balance out of your own pocket.
- Benefit Period. Your benefit period determines the length of time you will receive benefits from your policy. You can choose a benefit period that spans from two to six years, or the rest of your life.
- Elimination or Waiting Period. During this period, you must pay all of your long-term care expenses out of your own pocket. This period could last anywhere from 0 to 100 days. The longer the waiting period is, the lower your premiums will be.
- Inflation Protection. With health care costs rising to new heights every year, buying a policy without inflation protection is probably buying a policy that won't cover much of your expenses. There are two main kinds of inflation protection: the right to add coverage at a later date; and automatic coverage increases.
- Non-Forfeiture Benefit. Policies with this benefit will continue to pay for your care even if you stop paying premiums. This policy feature can add 10 percent to 100 percent to your premium. Top of FAQ LTC
What are some important features to consider?
- Clearly explains when you will be eligible for coverage and how your eligibility will be determined.
- Does not require that you spend time in a hospital before receiving benefits.
- Will be renewed as long as you pay the premiums.
- Lets you stop paying premiums once you begin receiving benefits.
- Has one deductible for the life of the policy.
- Automatically covers pre-existing conditions if you disclosed them when you applied.
- Offers choices for inflation protection including an automatic increase in your benefit on an annual basis or a guaranteed right to increase your benefit.
- Allows you to downgrade your coverage if you cannot afford the premiums.
- Includes coverage for dementia.
- Provides at least one year of nursing care and home health care coverage.
- Allows the right to cancel the policy for any reason with 30 days of purchase and receive a refund. Top of FAQ LTC
Is getting a long term care policy right for me?
- Long-term care insurance is probably not for everyone, but—with soaring health care costs, insurers increasingly restricting coverage and eligibility, and people's need to stretch retirement savings through more years—it's a good idea to consider it seriously. Your goals should be to protect your assets, minimize your dependence on other family members, and control where and how you receive long-term care services. Top of FAQ LTC
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