Long Term Care Insurance
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.
Ordinary health insurance won’t cover it. People are living 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 will only pay for long-term care if you’ve already spent most of your assets. So, there’s long-term care insurance. Long-term care insurance typically covers:
- Help in your home with daily activities like bathing, dressing, eating and cleaning.
- Community programs, like 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.
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. 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 should be lower.
Is a policy right for you? 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.
Key Issues to Review. Be sure you consider each of these issues:
- Coverage. You can choose long-term care policies that pay only for nursing home care, or only for home care, or a mix of services that includes nursing home, assisted living, and adult day care or in-home care.
- 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.
- Benefit Period. This determines the length of time you will receive benefits from your policy.
- Elimination or Waiting Period. During this period, you must pay all of your long-term care expenses out of your own pocket. This period is typically 20-100 days.
- Inflation Protection. There are two kinds of inflation protection: the right to add coverage at a later date; and automatic coverage increases.
Consumer Tip: Shop and compare policies. When you get your policy, review it right away to be sure it covers what you paid for.
Excerpted from Elder Answers
