Long Term Care Insurance

More and more, when people are faced with a disability, they are forced to ask tough questions about how to ensure they get the help they need on a daily basis. Today’s busy lifestyles make it increasingly difficult for family or friends to provide care, so individuals must turn to healthcare providers to aid them with even the simplest of tasks – eating, dressing and bathing. For this reason, insurance companies have begun offering long term care plans to cover some of the costs associated with getting the assistance necessary.
 
What is long term care insurance?
Generally speaking, a long term care policy is designed to cover expenses related to supporting an individual’s activities of daily living (ADLs). Programs like Medicare and Medicaid make small contributions, if any, and private insurance plans rarely offer this type of benefit. So, if a person is having trouble walking, dressing or eating, he or she will likely seek help from a caregiver either at home or in a specialized facility. By having long term care insurance, a portion of the daily costs will be covered.
It’s important to remember that these policies aren’t only for the elderly: almost half of recipients are between the age of 18 and 64. Anyone of any age who has trouble bathing, getting out of bed or making it to the restroom due to disability is likely to benefit from the coverage these types of plans offer.
 
Are there different policy options?
Yes. To begin with, there are divisions based on whether the benefits are taxable or not. Most policies are known as tax qualified (TQ), meaning the pay outs cannot be touched by the federal government. Non-tax qualified (NTQ) plans are considered more murky, as the Treasury Department has yet to specifically state they can be taxed, so policyholders take the chance of being billed for the benefits they received over the course of a year.
The differences don’t end there, either. TQ plans have more restrictive trigger clauses to get them going: the person must need care for more than 90 days and be unable to perform at least two ADLs due to physical or cognitive impairment. On top of that, a physician will be required to create a plan for the aid given. NTQ policies, on the other hand, have “medical necessity” triggers. These allow the individual’s doctor – and sometimes a representative of the insurance company – to simply prescribe care and the policy will pay.
 
How much does it cost?
A lot of this will depend on the amount of coverage you would like to have and the needs you anticipate. Will you be able to cover some of the costs with your own finances? Do you have a personal or family history of chronic health conditions? Could a family member or friend help part-time?

Obviously, rates will vary based on your answers to these questions. For the most part, these policies are set up to provide a pre-determined amount of money for each day of care, typically anywhere from $50 to $500. (As a frame of reference, the national average for this type of medical attention is $203 per day.) Whatever you decide to purchase, opt for inflation protection. Without it, you’ll receive the same daily benefit you first agreed to despite the fact costs are likely to continue to rise.
 

What are the odds that you would need Long Term Care Insurance?

As much as one wishes that one would never need long-term care, statistics relating to long-term care requirement are in favor of planning for one's long-term needs through insurance. 

  • At least 40% of people above the age of 65 will need long-term care. By 2020, 12 million senior Americans are expected to need long-term care.
  • A year at the nursing home could cost as much as $60,000 in larger cities. About 10% of all people seeking health care in a nursing home are likely to stay there for a minimum of 5 years, affecting nursing home bills exponentially.
  • A home health aide visiting could charge as much as $52.
  • Specialized nursing at home, which could include giving medication or administering oxygen, could be billed at $24,440 a year.
  • Medicaid, which covers home health care and nursing home care kicks in only when you have declared yourself and your spouse "poor"; it comes with no small loss of dignity.
  • Medicare payments in case of hospital stays can stop according to the Prospective Payment System. In such instances patients are released from the Medicare-certified hospital regardless of the patient's condition.
  • Even when the patient is recuperating in a nursing home after being coercively discharged from the hospital. Medicare coverage is puny, just 2% of the bill.

By insuring your long-term care needs you would be bringing down these medial expenses to a manageable amount, ensuring that you get care in the manner that "you prefer" and in a location of your choice.

 

Last Updated: 08/19/11