Long term care can be very expensive with Americans spending billions of dollars annually on various services and care options. Private financing options, such as long-term care insurance is an important option to consider when planning for your future. You can obtain a peace of mind by knowing that as you become older or you become ill or disabled by a stroke or Alzheimer’s disease, you will not only be able to afford the care you need, but you will still have enough money for you and your spouse to carry on living. Another factor to consider when planning your long-term health care options is to remember that no-one wants to become a burden and dependent upon their children for the cost of long-term care.
Government health insurance programs such as Medicaid may cover some expenses of long-term care, but doctors all over the country are reducing the number of Medicaid patients they accept each year. So those with private insurance will always have easier access to healthcare. Medicare on the other hand, does not cover long term care but may cover some costs of short-term care such as those needed after a hospital stay.
People who require long-term care are not necessarily sick in the traditional sense, but they are unable to perform two of the six activities of daily living such as dressing, bathing, eating, going to the toilet, continence, getting in and out of a chair or a bed, and walking without support. This can occur after an accident or an illness and is not always a life-long problem. Some insurance companies will only pay out if the patient cannot perform 3 of these activities of daily living.
Age is not always a determining factor of people needing long-term care. About 40% of people receiving long-term care today are between 18 and 64. But obviously long-term care is more prevalent amongst the elderly with about 70% of individuals over 65 requiring at least some type of long-term care during their lifetime. Once a change of health occurs though, the purchase of long-term care insurance may not be possible, so the timing of this purchase is important.
Long-term care is becoming an issue as our population is getting older with people living longer. More people require assistance with their everyday activities and require close supervision especially if they suffer from dementia or Alzheimer’s. Women are more likely to require assistance because traditionally they tend to live longer than men.
Long Term Care Coverage – What Are Your Options?
Long term care insurance is an insurance product sold in the USA that helps pay for the costs associated with long-term care. Long-term care insurance covers aspects of care that are not necessarily covered by your normal health insurance, Medicare or Medicaid.
Long term care insurance can cover many aspects that are needed, including
- Home Care
- Assisted Living
- Adult Daycare
- Respite Care
- Hospice Care
- Nursing Home
- Alzheimer’s facilities
- Home modification to accommodate disabilities
If home care coverage is included in the policy purchased, long term care insurance will pay for home care often from the first day it is needed.
Once you have purchased a policy the insurance company may not change the language. The policy is usually guaranteed renewable for life. It cannot be cancelled by the insurance company for any health reasons but can be cancelled for non-payment.
Long Term Care Insurance – What Are The Costs?
As people age or become ill they may need help with getting normal daily tasks done, like dressing, bathing, moving around and more. Long term care provides people with those services, but this care is expensive and without any insurance, it can deplete savings quickly.
To give you some idea of what long term care insurance costs, here are some costings. According to the Alzheimer’s Association, the cost of end-of-life care in 2016 ranged between $217,820 and $341,651 per annum. The average cost of a semi-private nursing home room nationwide is $85,775 per year, assisted living is $45,000 annually, and home health aides charge $135 per day. (According to Genworth’s 2017 Cost of Care Survey). Genworth have also calculated that the expected annual cost of nursing home care in 2028 for a semiprivate room will be $120,008 and a private room will be $134,896.
To cover these costs of long-term care, which you may need one day, it may be in your interest to explore the possibility of purchasing a Long-Term Care Insurance Policy. Long-term care insurance will ensure that you will have the money to cover at least a portion of this bill. Most health and disability insurances do not cover long term care.
Long term care insurance rates are determined by 6 main factors:
- The person’s age
- The daily or monthly benefit
- The length of time the benefits pay
- The elimination periods
- If inflation protection is included
- The health rating of the client (preferred, standard or sub-standard)
A survey of the average cost of long-term care insurance annual premium is $2,727 according to the industry research firm LifePlans, Inc (2018). This provides a benefit of $161 per day for nursing home care for a set number of years (four is the most common). An inflation proviso can be included that would increase the daily benefit over time, typically by 3% a year. Discounts for couples are common and are typically 30% off the price of policies bought separately.
Most policies have an elimination or waiting period whereby you must pay for your own care before benefits are paid. But some policies have the option of zero elimination days where covered services are provided. A policyholder can also select a maximum daily or monthly benefit, and this will reflect in the amount the insurance company charges for the premium.
It is difficult to predict what sort of long-term care a person may need. When planning your long-term care insurance take careful consideration and input from a professional insurance specialist who can advise you of your best and most cost-effective options.
