QUESTION:

What is long-term care? How do you decide if you need it, and which type to purchase?

ANSWER:

Deciding whether or not to purchase long-term care insurance is a decision that many people struggle with. Elder care is an issue few people want to think about, however it is an issue that more and more Americans are being forced to face. What's worse is everyone you turn to for advice (heath care professionals, lawyers, and insurance agents) all disagree about who needs long-term care, and what it entails. A common misconception about long-term care is that it is specifically for senior citizens. In actuality, long-term care can be applied for disabled people as well. The need for long-term care doesn't just affect the elderly, more than 40% of the functionally disabled in this country are between 18 and 64. Long term care, also known as extended care, is defined as, "skilled nursing care, intermittent skilled care, or custodial care required over an extended period of time by someone chronically ill or disabled." Long term care is often used to describe the care provided at home or in a nursing home, and can also be provided in an adult day care center or an assisted living facility.

Long term care insurance helps pay for nursing home care and usually home care services for a period of two or more years. Most individual policies are available for purchase only to people between the ages of fifty and eighty-four. Most long-term care policies are structured as indemnity policies, meaning they pay up to a pre-set cap for each day of a covered service. Each specific provision of each policy should be carefully analyzed before purchasing one, since the possible conditions and limitations on coverage can be complex. For example, newer policies may cover assisted living facilities, adult day care, respite care, or other long-term care services. Make sure you know what exactly you are buying and research each policy thoroughly.

Costs of long term care insurance are determined by your age, the extent of coverage you purchase, and your health history. Your age is the most important factor because the risk of needing long-term care increases significantly with age. For example, the premium for a seventy-five year old can be double or triple that for a sixty-five year old. It is important to remember that long term care policies are underwritten by medical professionals, meaning medical records are required as part of the application process.

As we get older, we are forced to pay huge out of pocket expenses for our health care. Take Medicaid for example; some people are forced to spend down their assets so that they may qualify for Medicaid. There are three options when it comes to determining how you want to finance your long-term care. They are (1) Self Fund, (2) Medicaid, and (3) Insurance. Self-fund is when the patient pays the full cost of care from their personal assets. Keep in mind that a couple must be prepared to pay for the cost of the spouse in the facility as well as the spouse that is at home. Medicaid is a government/tax-supported benefit that is only available for low-income individuals. Insurance is often used to fund long-term care costs. These insurance policies pay cash benefits for a designated period of time after a waiting period.

When evaluating what kind of policy you need, it is important to compare more than one policy side by side. Keep these suggestions in mind while evaluating policies: make sure your policy will pay benefits for all levels of care in a nursing home, a good policy will pay benefits for assisted living and home care (including in-home personal care), consider whether the amount of daily benefits will be adequate now and in the future (many policies give you a range of daily benefits amounts to choose from), do not assume that more years of coverage is always better, avoid policies that exclude coverage of pre-existing conditions for a lengthy period, policies should allow payment of nursing home or home health benefits without requiring a prior period of hospitalization as a condition of coverage, make sure you are aware of the waiting period that most policies impose (you may want a shorter or longer waiting period), make sure that your policy covers victims of Alzheimer's disease and other forms of dementia, be certain that the premium remains constant over the life of the policy and that the policy is guaranteed renewable for life, and buy a policy only from a company that is licensed in your state and has agents physically present in your state.

There is a growing fear among Americans that Social Security and Medicare will run out before we have the ability to benefit from it. For many people Long-term care is the next best cure to this growing fear.

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