Long-Term Care Insurance - I

A woman age 65 today can expect to live another 19 years. That’s the good news. The bad news is the estimate that over 50 percent of women will enter a nursing home before  they die, and the current national average cost per day of a private room in a nursing home is more than $200 or almost $75,000 per year. In addition to having a financial impact, long-term care needs also have a family impact. A recent survey showed that one in four American households is providing some kind of caregiving support for a family

member.

Will you have the resources to pay for long-term care if you need it? Would long-term care insurance enhance your personal health care future? What follows is some information to think about before you buy a long-term care insurance policy. And, if you decide that long-term care insurance is right for you, there is information on some features to look for in a policy.

What is meant by the term “long-term care?” Long-term care is different from health care. 

The general intent of health care is to return a person to good health, so its focus is on skilled or acute care. In contrast, long-term care focuses more on caring than on curing. Generally, longterm care provides either custodial or supervisory care when a person is unable to perform basic activities of daily living, such as eating, bathing, or dressing, because of a physical or cognitive impairment.

What is long-term care insurance? Long-term care insurance is designed to help cover the cost of certain long-term care expenses and services you might need that are not covered by Medicare or Medigap insurance. Remember that Medicare does not cover long-term custodial care, and to qualify for Medicaid you must spend down most of your resources. For further information on Medicaid and the resource limits, go to www.cms.hhs.gov/Medicaid.

The financial assistance that long-term care insurance provides can help you protect your assets—rather than spending down to become Medicaid eligible; stay in your own home with paid help—rather then going to a nursing home; choose the assisted living facility where you want to live—rather than going to a facility because it has an available Medicaid space.

There are three basic types of long-term care insurance: 1) Most policies are indemnity policies. They pay a pre-determined fixed dollar amount toward your costs for each day that you receive covered care services regardless of actual expenses. You might be insured for $100 per day of covered care and you would pay the rest of the daily rate. 2) Another type of long-term care insurance, expense reimbursement, pays a portion of costs for services up to a predetermined daily or monthly limit rather than a set dollar amount. 3) The third type, cash, pays a specific dollar amount each day you have the impairment regardless of the actual charges for covered services received or whether you receive care every day. There are also hybrid policies that combine various elements for consumer flexibility. In each of the versions, you are responsible for any costs above the covered or defined benefit amounts of the policy