What is long-term care?

Long Term Care InsuranceLong-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities. There are three (3) levels of long-term care: (1) 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. (2) Intermediate care: Provided by professional health care providers but on a less frequent basis than skilled care. (3) Custodial care: Personal care that’s often given by family caregivers, nurses’ aides, or home health workers who provide assistance with “activities of daily living” such as bathing, eating, and dressing. Most common type of long-term care is home-based care.

Is it important to plan for long-term-care?

Approximately 40% of people age 65 and older will need long-term care at some point during their lifetimes.* Moreover, approximately 14% of people age 71 and older have Alzheimer’s which often leads to the need for long-term care. The cost of long-term care is rising: Currently, the average annual cost of a 1-year nursing home stay is $74,820* 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 $135,133. *National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services, 2011 **Alzheimer’s Association, 2011

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 a joint federal-state program. Two-thirds of nursing home residents currently rely on Medicaid to pay some of their long-term care expenses. But to qualify for Medicaid, you must have limited income and assets. Although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in many 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?

Long-term care insurance protects you against a specific financial risk. The risk in this case is 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, consider issues such as: Benefit amount; Benefit period; Elimination period; Types of facilities covered; and Inflation protection: With inflation protection, your benefit will increase by a certain percentage each year. Your insurance agent or a financial professional can help you compare long-term care insurance policies and answer any questions you may have.