Long Term Care Insurance
What is Long Term Care
Insurance?
Because of old age, mental or physical illness, or injury, some people
find themselves in need of help with eating, bathing, dressing,
toileting or continence, and/or transferring (e.g., getting out of a
chair or out of bed). These six actions are called Activities of Daily
Living-sometimes referred to as ADLs. In general, if you can't do two or
more of these activities, or if you have a cognitive impairment, you are
said to need "long-term care."
Long-term care isn't a very helpful name for this type of situation
because, for one thing, it might not last for a long time. Some people
who need ADL services might need them only for a few months or less.
Many people think that long-term care is provided exclusively in a
nursing home. It can be, but it can also be provided in an adult day
care center, an assisted living facility, or at home.
Assistance with ADLs, called "custodial care," may be provided in the
same place as (and therefore is sometimes confused with) "skilled care."
Skilled care means medical, nursing, or rehabilitative services,
including help taking medicine, undergoing testing (e.g. blood
pressure), or other similar services. This distinction is important
because Medicare and most private health insurance pays only for skilled
care-not custodial care.
Should I buy long-term
care insurance?
If you need long-term care services and have to pay to obtain them, what
financial resources could you call on? Do you have enough to pay for
four or more years in a nursing home, an assisted living facility, or
home health care?
If you're over 65, don't rely on Medicare or private health insurance.
Medicare doesn't pay for custodial care, and private health insurance
rarely pays any of the cost of long-term care.
If you expect to have very little money when you need long-term care
services, you might qualify for Medicaid, a government program that pays
the medical and long-term care expenses of poor people. If you expect to
be in that situation, you probably shouldn't buy long-term care
insurance, because your state's Medicaid program will pay your long-term
care expenses. Buying long-term care insurance would only save the
state, not you money. The exception is if you live in California,
Connecticut, Indiana, or New York, states that have a Partnership for
Long-Term Care program. For residents of these four states, buying
long-term care insurance does offer an additional benefit.
If you expect to have a lot of money when you need long-term care
services, you also probably shouldn't buy long-term care insurance.
Instead, you should plan to pay for the care "out of pocket"? that is, as
a regular expense. One financial advisor suggested in a newspaper
interview that if your net worth is in the $1.5 million range, not
including the value of your home, you could safely skip buying long-term
care insurance and treat long-term care expenses, if they arise, as you
do your other bills.
If you fall in-between these two categories, owning long-term care
insurance, like all other insurance coverages, offers peace-of-mind
benefits as well as financial ones. For example, a recent survey of
people age 50 and over asked how confident they were that they could pay
for long-term care services if they needed them. Among those with
long-term care policies, 52 percent said they were very confident and
another 40 percent said they were somewhat confident. Among those who
didn't own a long-term care policy, only 8 percent were very confident
and only 27 percent were somewhat confident.
But if you're under 85?and especially if you're under 65?that doesn't
mean you should ignore the topic of long-term care insurance because:
You might already be unable to buy long-term care insurance. Wakely
Consulting Group, an actuarial firm, studied applicants for long-term
care insurance in 2003-2004; the findings: 11 percent of applicants in
their 50s, 19 percent in their 60s and 43 percent in their 70s were
rejected.
A Milliman & Robertson actuary estimated that 15 to 25 percent of the
over-65 age group are uninsurable for long-term care.
A report from the Henry J. Kaiser Foundation indicates that over five
million people ages 18-64 need some type of long-term care.
The latest data from the National Center for Health Statistics (for
1999) reported that roughly 160,000 of the people living in nursing
homes were under age 65 (nearly 10 percent of the total). Of those
receiving home health care services, roughly 400,000 were under 65
(about 30 percent of the total).
So, unless you have so little money that you will qualify for Medicaid,
or so much money that you can pay the bills out of your own pocket, you
should consider buying long-term care insurance.
With Permission © III. - ALL RIGHTS RESERVED
Additional Resources
Brier Payne Meade, Topeka – (785) 233-1717
Brier Payne Meade, Kansas City – (913) 402-9576
Get Driving Direction To Our Locations
|
Life Stages Insurance Need .....
|
