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Even as we get older, many of us don’t like to think about getting older, do we? Many of us will put off doing things that we know, deep down, we need to – things like creating a will or talking to our families about end-of-life care. Some of us don’t even like to think about the little things that keep us safer as we age, such as grab bars in the bathroom or a medical alert pendant worn around the house or on-the-go. It can be easy to see these things as a loss of independence, rather than what they really are, which is a way to keep our independence for longer.
We also don’t like to think about long-term care insurance. That’s the insurance that covers long-term services such as home health care for daily living and even skilled nursing care for those who suffer from serious medical complications in their later years.
According to the Administration for Community Living, more than 70% of those aged 65 and older will need long-term care services and support. This might take the form of something quite affordable, such as an emergency response solution or help with transportation to doctor’s appointments. Or it might take the form of round-the-clock medical care, which can be prohibitively expensive without insurance to cover it. Getting a long-term care insurance policy to cover those expenses is a great idea.
What is Long-Term Care Insurance?
Long-term care insurance is a policy that covers services to assist you with daily living. This might include everything from help at home to round-the-clock nursing care in a facility designed for that sort of assistance. Some might see long-term care insurance as something that only covers hospital stays and the like, but that isn’t the case!
When you choose a long-term care insurance policy, you can opt for a variety of benefits and care options that give you the assistance you need. But it’s important to get this insurance well before you actually need it, as long-term care policies require medical underwriting. That means that the insurance company will look at your current health and medical history to make a decision on whether you can get the insurance at all. If you are in bad health or already getting some sort of formal assistance at home, you might not qualify, or you might be offered a higher premium cost than expected.
Health Insurance and Savings Aren’t Enough
There is a common misconception that health insurance will cover long-term care. That’s usually not the case. A typical medical health insurance policy will cover acute care in a medical facility – such as for recovery from a stroke – but will not cover expenses beyond basic rehabilitation. A good rule of thumb is to remember that medical insurance covers medical treatment – it doesn’t cover the expenses of daily living. That’s what long-term care insurance is all about.
You might also think that your investments and savings will be enough to pay for long-term care. If you are fortunate to have a large nest egg, you might be able to afford long-term care for a while. But what if you live much longer than you anticipate? What if your long-term care costs rise drastically with inflation? Or what if you wind up needing much more intensive care beyond assistance at home?
A study by the Department of Health and Human Services found that 14% of seniors needed two years or more of nursing home care, while 15% received nursing home care for at least 90 days before the age of 85. While it’s always more affordable to get care at home, sometimes we’re not lucky enough for that – and nursing home care is quite expensive. Of the elderly adults who needed long-term care, only 13% of them received that long-term care from Medicaid[1].
Medicare won’t be a safety net for long-term care either. Traditional Medicare will cover skilled nursing care right after hospitalization for an illness or injury, just like most private insurance policies do. Medicare Advantage might offer supplemental coverage that helps with some expenses, such as transportation to medical appointments, but there is no true coverage for long-term care[2].
Veterans of the United States military have other options – they qualify for long-term care assistance through the U.S. Department of Veterans Affairs[3].
How Much Does Long-Term Care Insurance Cost?
The cost of a long-term care policy depends upon a variety of factors in addition to your current health and medical history. The following factors all play a part in how much you’ll pay:
· Your current age
· The amount a policy will pay per day
· How many days or years that policy will pay
· The lifetime maximum amount of the policy
· The types of benefits selected
The maximums offered by the insurance companies will vary widely too. For instance, some of them will offer care for anywhere from two to five years, while some will offer lifetime benefits. It might also not be a matter of time, but of money – the policy might offer a certain amount of coverage to pay for the assistance you need but once you hit the policy’s monetary limit, there will be no more funding.
The costs of your policy might be fixed for a set period of time or they might go up on an annual basis. Initially, the fixed premiums will probably be cheaper than the variable ones, but the variable ones can go up significantly and eat up all the initial premium savings. Talk with your insurance agent about what to expect and how to protect yourself from premiums that can rise dramatically as inflation goes up. Experts recommend that you don’t spend more than 5% of your annual income on long-term care insurance[4].
What Does it Cover?
A long-term care policy covers a variety of issues you might face as you get older, including those stemming from a chronic medical condition, a disability, or a cognitive problem, such as Alzheimer’s disease or dementia. The care you receive might be at home, in a nursing home, in an assisted care facility, or an adult day care center.
If you are getting help at home, a long-term care insurance policy can cover home health aide services and homemaker services. Home health aides help you directly with the basics of living, including bathing, getting dressed, eating, and moving around your home. Homemaker services provide indirect help, such as cooking, cleaning, and running errands. The policy can also cover adult day care, where you visit a facility during the day for care and socialization and come home at night.
These costs are not insignificant; this is what you might pay each year, according to the Genworth 2021 Cost of Care Survey:
· Home health care: $61,776
· Homemaker services: $59,488
· Adult day care: $19,236
· Assisted living facility: $54,000
· Nursing home care (semi-private): $94,900
· Nursing home care (private): $108,405
For most policies, the benefits kick in when you can’t do at least two of the six activities of daily living on your own. These six activities include:
· Bathing and practicing good hygiene.
· Eating food
· Caring for incontinence issues
· Getting dressed
· Getting on and off the toilet
· Transferring from one place to another, such as getting in and out of bed or a chair
If you can’t do these things, your doctor will need to formally state that in your medical chart. When you request payments from your policy, that medical record will be important to establish exactly what you need. You might need other documentation as well, so keep all pertinent information in a dedicated folder where you can access anything the insurer needs quickly. The faster you provide the documentation they want, the sooner they will begin to pay your policy benefits.
Moving Gracefully Through Your Golden Years
When you notice that the activities of daily living are harder for you to perform, it’s important to take steps to make your home environment safer. This can and should include a medical alert system with fall detection to provide peace of mind that if you fall down or have any type of emergency, help will be on the way in a matter of moments. But there are many other elements to ensuring your safety, including aging in place home solutions that can alleviate the worry about falling or suffering other accidents.
For instance, grab bars in the bathroom can help prevent slips and falls while getting on or off the toilet. A shower chair is a good idea for those who have balance concerns in the bathtub or shower (and PERS or personal emergency response systems do work in the shower). Non-skid flooring can help you stay on your feet. Bright lighting can eliminate shadows and allow you to see better to do the things you enjoy, such as reading or cooking.
Long-term care insurance is something that you need to plan for now, while you are still in good health. It can be tough for seniors to think about something that you might not need for many years. But by taking care of that issue today, you can breathe easier through the rest of your golden years.