Long-Term Care

It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. 

The big question is: How will you pay for it?

Long-term care refers to a host of services that aren’t covered by regular health insurance.  Examples include assistance with routine daily activities, like bathing, dressing or getting in and out of bed.

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:

• Your home.
• A nursing home.
• An assisted living facility.
• An adult day care center.

Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage is not an option. You won’t qualify for long-term care insurance if you already have a debilitating condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s.

Why buy long-term care insurance?

About half of 65-year-olds today will eventually develop a disability and require some long-term care services, according to a study revised in 2016 by the Urban Institute and the U.S. Department of Health & Human Services. Most will need services for less than two years, but about 14% will require care for more than five years.

Regular health insurance doesn’t cover long-term care. And Medicare won’t come to the rescue, either; it covers only short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.

If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.

People buy long-term care insurance for two reasons:

1. To protect savings. Long-term care costs deplete a retirement nest egg quickly.
2. To give you more choices for care. The more money you can spend, the better the quality of care you can get.  Relying on Medicaid, your choices are limited to the nursing homes that only accept payments from the government program.  

How long-term care insurance works

You choose the amount of coverage you want. The policies usually cap the amount paid out per day and the amount paid during your lifetime.

Under most long-term care policies, you’re eligible for benefits when you can’t do at least two out of six “activities of daily living,” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

The activities of daily living are:

• Bathing
• Caring for incontinence
• Dressing
• Eating
• Toileting (getting on or off the toilet)
• Transferring (getting in or out of a bed or a chair)

When you need care and want to make a claim, the insurance company will review medical documents from your doctor and may send a nurse to do an evaluation. Before approving a claim, the insurer must approve your “plan of care.”

Under most policies, you’ll have to pay for long-term care services out of pocket for a certain amount of time, such as 30, 60 or 90 days, before the insurer starts reimbursing you for any care. This is called the “elimination period.”

The policy starts paying out after you’re eligible for benefits and usually after you receive paid care for that period. Most policies pay up to a daily limit for care until you reach the lifetime maximum.

Some companies offer a “shared care” option for couples when both spouses buy policies. This lets you share the total amount of coverage, so you can draw from your spouse’s pool of benefits if you reach the limit on your policy.

Cost of long-term care insurance

The rates you pay depend on a variety of things, including:

• Your age and health: The older you are and the more health problems you have, the more you’ll pay.  
• Gender: Women pay more than men because they live longer, meaning a greater chance of making long-term care insurance claims.
• Marital status: Premiums are lower for married people than single people.
• Insurance company: Prices for the same amount of coverage varies among insurance companies. 
• Amount of coverage: You pay more for richer coverage.  Examples include higher daily limits, lifetime benefits, cost-of-living adjustments, inflation protection, shorter elimination periods, and fewer restrictions on the types of care covered.

Nursing Home Costs

$300-$350 PER DAY = $9,000 - $10,500 PER MONTH = $108,000-$126,000 PER YEAR

Average stay is 3 to 5 years

Total Cost

• $324,000-$540,000 Minimum
• $378,000-$630,000 Maximum

We know that it's a hard pill to swallow but we have 3 options for you.  Contact us to find out what they are.