What is Long-Term Care Insurance?Financial & Legal Planning | October 6, 2016
Long-Term Care Insurance for Senior Healthcare
Something on the minds of many people is exactly how they can best prepare for their future healthcare needs, as well as how to pay for supportive services or senior living accommodations. According to the U.S. Department of Health and Human Services, 70% of those age 65 or older will need some form of long-term care in the years ahead, and regular health insurance does not cover the cost of this type of care.
Long-term care insurance (LTCI), was created to provide coverage to older adults to ensure their future healthcare needs will be met. There is no “average” cost for LTCI; the costs of long-term care insurance vary and depend on a variety of factors, including:
Current age and health status: It’s recommended to purchase long term care insurance at a younger age, before your health starts to decline. The older and less healthy you are, the more your policy will cost. Plus, pre-existing conditions may disqualify your coverage.
Amount of coverage: The more coverage you desire, the higher the cost. For example, if you set higher limits on the daily and lifetime benefits, protection against inflation for cost of living, and less restrictions on the types of care that are covered, you can expect to pay a higher premium.
The insurance company: Long term care insurance coverage also varies among the different insurance companies who offer it. Make sure you receive several quotes before making a decision on a policy.
What Does Long-Term Care Insurance Cover?
When researching long-term care insurance policies, it’s important to look for a policy that will cover the types of services and facilities you will need in your area. In general, typical, comprehensive long-term care insurance coverage includes:
Assisted Living: Assisted living or personal care apartments provide a living space along with a variety of services and amenities, like daily meals and help with daily living activities as needed. Assisted living is for those who need a bit of help in their daily lives, but do not need 24-hour care yet.
Skilled Nursing Care and Rehabilitation: These residential facilities provide a full range of skilled nursing care and rehabilitation for those recovering from an illness, injury or surgery. Care is available around the clock, along with daily social events and activities.
Memory Care and Support: Customized memory care is offered in a residential setting for those with Alzheimer’s disease or another form of dementia.
Home Care: A company that provides trained healthcare professionals in-home to assist with daily living activities, medication management and/or light housekeeping tasks.
Adult Day Services: A program or facility that provides daily care and social support to seniors in need of some assistance, often to provide relief to a family caregiver.
Respite Care: Respite services involve short-term care or temporary care for aging loved ones to relieve family caregivers of daily caregiving duties.
The Benefits and Risks of Long-Term Care Insurance
While long-term care insurance might not be an affordable option for everyone, it’s an important choice to consider for your future health needs. Financial experts recommend that you look for a policy with a monthly premium that is 5% or less of your monthly income. Keep in mind that over the years, your premiums could rise while your income starts to decline.
Remember, Medicare only pays for a short-term stay in a skilled nursing facility after you have been hospitalized for at least three days. Then, they will pay for the next 20 days of care needed. This is where your long-term care insurance would come into play, depending on the coverage you have chosen.
Before making a decision about whether long-term care insurance is right for you, talk to a financial advisor and read all the fine print. You should understand the entire outline of your coverage, including the benefits, limitations and any exclusions.