What is Long Term care?
Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid. Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.
Age is not a determining factor in needing long-term care. About 60 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime. About 40% of those receiving long-term care today are between 18 and 64. Once a change of health occurs, long-term care insurance may not be available.
What happens if I never use the coverage?
I’ve got good news and bad news. First, the bad news. You use it or you lose it. Just like your car insurance, health insurance or your homeowners insurance, if you did not wreck your car, get sick, or your house did not burn down, it has no value. That was the cost of protection. Buying this insurance involves calculating the costs, risks and benefits—and hoping that you come out ahead.
Now, the good news. If you are one that has decided not to purchase Long-Term Care coverage you have other options. There are plans referred to as Long-Term Care Combination Plans. These plans combine either Life Insurance and Long-Term Care Benefits or Annuities and Long-Term Care Benefits. It can be purchased with a one-time single premium or annual premiums. They provide long-term care benefits for a certain number of years, a death benefit if you don't use long-term care and a money-back option that returns the premium in case you decide you don't want the policy after all.
Paying for Home Health Care
A key issue in long term financial planning is paying for home health care. Home care may be the only way to keep a loved one out of a nursing home. It certainly can be a major expense. Just ask a friend or neighbor if they have experienced this issue and they will probably say “yes”. Our population is aging, no doubt, and with age daily living can have its challenges. Today many families are dual income families, it's rare to have a stay at home family member who could provide the care needed to an elder family member. This could be a challenging issue if forced to pay out of pocket for services.
Health Maintenance organizations (HMOs) and some long term care plans do provide coverage for home health care. Read policies carefully and check on benefits. Call the insurance provider to see what is exactly covered in the plan. Be aware that do to privacy laws, the providers may require written permission for you to discuss your loved one's plan, once you secure that, you can go ahead and get the facts on the policy.
doesn't Medicare cover all of my expenses?
The short answer is NO. Medicare only covers LTC for short periods of time, such as rehabilitation after an injury or illness. It does not cover assistance with ADLs that many older adults need to maintain their independence. Medicaid will cover nursing home care only if your income is below a certain level and after you've depleted almost all of your savings.
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