1. What is Long Term Care?
Long term care refers to a number of different services intended to assist individuals in need of medical and non-medical care. It provides individuals with assistance in performance activities of daily living like bathing, dressing, or eating. Long term care can be performed in an individual’s residence, assisted living facility, or nursing home.
2. What does Long Term Care Cost?
The cost of long term care services can vary greatly based on the type of care needed and where the care is received. The national average annual cost of a semi-private nursing home room is over $70,000, or more than $213 per day.1 Home care, which is generally less expensive, has a national average hourly cost of $19 – assuming home care is needed 40 hours per week – the average annual cost would exceed $39,000.2
3. Will Health Insurance Pay for Long Term Care?
A common misconception is that health insurance will pay for long term care expenses. The fact is, long term care is generally not considered medical care. Because of this health insurance plans will not pay for long term care expenses.
4. Will Medicare or Medicaid Pay for Long Term Care?
Medicare will generally cover skilled care assuming you have been in the hospital for at least 3 days. However, it will not provide care for an extended period of time (e.g. more than 100 days). Also, it usually does not cover home or personal care services.
Medicaid only covers long term care costs for the very poor. In order to qualify for long term care you must meet your states poverty guidelines.
5. Will Disability Insurance Pay for Long Term Care?
Disability insurance was not designed to pay for long term care. It was designed to replace loss income due to a disabling illness or injury while you are actively employed. In addition, disability insurance coverage typically ends at age 65 or upon retirement, whichever occurs first.
6. Can I Pay for Long Term Care Myself?
Yes. An individual can pay for the cost of long term care utilizing their personal assets. But, in many cases, individuals underestimate the cost of long term care. In a scenario where one spouse requires long term care and the other does not, use of personal or retirement assets can have an ongoing negative financial impact on the spouse not requiring care.
7. What are the Odds of Needing Long Term Care?
- Approximately seventy percent of individuals over age 65 will require some type of long term care during their lifetime.*
- On average, an individual age 65 today, will require some form of long term care services for three years, while twenty percent will require services for more than 5 years.*
- Forty percent of individuals currently receiving long term care are between the ages of 18 and 64.*
- By 2020, more than 20 million people will require long term care services.*
*Source: U.S. Department of Health and Human Services
8. Who Receives Long Term Care?
Many people would be surprised to discover who receives long term care services. Individuals of all ages can require long term care; it is not just a problem for the “older generation.” A long term care event can occur suddenly as a result of a serious accident, an illness, disabling disease, or a cognitive impairment like Alzheimer’s disease or dementia.
9. Where are Long Term Care Services Provided?
Long term care services are generally thought of as occurring in a nursing home, but most people prefer to receive care outside of a nursing home, provided there isn’t any other alternative. What surprise people is long term care can be performed in a number of different settings, including an individual’s residence, assisted living or residential care facility, nursing home, or a community based adult day care center.
10. Is there an Insurance Policy to Pay for Long Term Care?
Yes. Individuals and families can purchase long term care insurance to help cover some or all of the costs of a long term care event. Long term care insurance allows families to protect assets and maintain independence by providing a risk management alternative for funding long term care expenses. Long term care insurance can a very economical way to cover long term care costs.
11. How Does Long Term Care Insurance Work?
Long term care insurance policies are designed to pay for services for individuals who require assistance in performing Activities of Daily Living (ADLs) – these include daily activities like getting dressed, eating, or getting out of bed. In addition, long term care insurance also offers coverage for individuals who may experience a cognitive impairment, like Alzheimer’s disease or dementia.
When you purchase a long term care insurance policy you decide how much benefit you would like to receive on a daily or monthly basis – this is known as the Facility Benefit. The Facility Benefit is the maximum amount your long term care insurance policy will pay for services on a daily or monthly basis. Generally, the minimum daily benefit available is $100 per day up to a maximum of $1,000 per day.
12. What Types of Services are Covered?
Long term care insurance policies offer different types of services in a variety of scenarios. These scenarios are generally categorized as skilled care and custodial care. Skilled care includes physical, occupational, respiratory, speech therapy and nursing care from a licensed professional. Custodial care includes assistance with daily activities like eating, dressing, and bathing.
13. What Does Long Term Care Insurance Cost?
Long term care insurance policies are generally customized for each individual’s needs. It is not a one size fits all type of insurance policy. The cost of long term care insurance varies based on the age of the individual applying for coverage along with their medical history. In addition, the cost of long term care insurance can vary greatly depending on which features and benefits are selected.
14. What About the Rising Cost of Health Care?
Like most items we purchase, the cost of almost everything increases over time. Long term care services are no different. In fact, the national average increase in long term care costs over the last six years has gone up by six percent.* Because of this, almost all long term care insurance policies offer differing levels of inflation protection to help your policy keep up with increases in long term care costs. More importantly, the younger you are when obtaining coverage, the more important it is to have inflation protection. It is important to note that there is an additional cost for including this feature.
*Source: 2011 Genworth Cost of Care. April 2011. Genworth Financial.
15. Is there an Advantage to Purchasing a Policy Now?
When considering long term care insurance it is always better to purchase coverage sooner rather than later. The younger you are when you obtain coverage the less expensive the coverage will be on an annual basis, and over your lifetime. The other factor that can often be more important than premium savings is your health. By purchasing coverage today you can avoid the risk of not qualifying for long term care insurance in the future for health reasons. Purchasing a long term care insurance policy can help you protect your asset from the high costs of long term care.
16. Is Long Term Care Insurance Right for You?
Long term care insurance can be the right choice if you have income or assets you would like to protect against the high costs of long term care. There is no reason for individuals to put their home, life savings, or other assets at risk of going to a nursing home instead of to your spouse, children, or charity. It also important to consider long term care insurance if the following are important to you:
- Multiple Facility Access. Private pay patients have the freedom to select a facility based on personal needs.
- Self Reliance. Most individuals do not want to be a financial or emotional burden on their spouse, children, friends, or other family members.
- Peace of Mind. Knowing that in the event a long term care scenario occurs you and your family will be taken care of can be of great comfort.
17. How do I Become Eligible to Receive Benefits?
In order to become eligible to receive benefits from your long term care insurance policy, a licenses health care practitioner must certify you as having a chronic illness or disability. A majority of insurance companies classify a chronic illness or disability as the inability to perform a minimum of two Activities of Daily Living (ADLs), without substantial assistance, resulting from a loss of functional capacity.
You should also be eligible to receive benefits if you suffer a severe cognitive impairment requiring supervision for purposes of protecting your health and safety.
18. What Happens When I do Become Eligible to Receive Benefits?
When you become eligible to receive benefits from your long term care insurance policy you will be required to satisfy the elimination or waiting period prior to receiving benefits. The elimination period is determined when the policy is originally purchased. Generally, policies offer elimination periods of 0, 30, 60, 90, 180, & 365 days. Most people compare the elimination period to a deductible – similar to car insurance or health insurance. Unlike deductibles, the elimination period is based on a number of days and not a dollar amount. Upon satisfying the elimination period, the insured will begin receiving benefits from the policy. Policy benefits will continue to be paid until the benefit pool has been exhausted.
19. Do I have to Keep Paying Premiums Once I Begin Receiving Policy Benefits?
Most policies automatically include a Waiver of Premium, at no additional cost, that eliminates the need to continue paying policy premiums once the insured becomes eligible to receive benefits and has satisfied the elimination period.
20. What’s the Next Step?
Designing a long term care insurance strategy that is right for you and your family can be complex without proper professional guidance. If you are interested in learning more about what options are available to you contact one of our long term care insurance professional advisors or request a complimentary long term care insurance quote. Our firm represents over a dozen different long term care insurance companies, and will make sure you get the policy you want from the insurance company that offers it for the most affordable price.