Using Your Long Term Care Insurance Benefits
Sometimes it’s difficult to visualize yourself as a senior, but the most probable scenario is that you'll eventually need some help taking care of yourself or your home later in life. Long-term care is always a sensitive topic. Actually no one likes to picture themselves or their loved ones without the ability and independence to live on their own. But if you have considered the option to protect your finances and make a smart decision for you and your family, then you need the advantages of long term care insurance.
What Is Long Term Care?
Long-term care makes reference to a variety of services that are not covered by regular health insurance policies. Long term care usually includes help and assistance with normal daily activities, like getting in and out of bed, bathing and grooming, eating, dressing, etc. While we usually think of this type of home care as meant for seniors, you can apply for LTC insurance at any point in your life.
A long-term care insurance policy is really useful because it helps you and your family with the payments of that special assistance and care in case you suffer from a chronic medical condition, a disability or a progressive cognitive disorder such as dementia or Alzheimer’s. Most senior care policies will compensate you and refund the money spent in care given in a diversity of places, such as:
- Your own home.
- A nursing home.
- An assisted living facility.
- An adult day care center.
Budgeting and considering long-term care costs is an essential part of any long term financial plan, especially if you’re already in your 50s. A lot of people often wait until they need special care to consider a long term care insurance option but in most cases it is already too late because you won’t pass the qualification process for a long term care insurance if you already suffer from a debilitating condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s which is the ideal age to start thinking about your future and retirement.
Long Term Care vs Medicaid
Long term care benefits are the most misunderstood service that is provided by the Medicaid program.
Medicaid does not refer to long-term care insurance for everyone, but a lot of people who expect to rely on it in their golden years, are usually unaware of this. As a result of this misinformation, they find themselves without the adequate care they need or have already planned.
Medicaid is a program specially designed to provide diverse medical and caregiving services to people who cannot afford it. While Medicaid long-term care is a great and useful service for those who don't have much savings or a retirement fund, it is not for everyone. Some people make the mistake of not buying a long term care insurance and relying on Medicaid instead. Sadly most of these people find out too late that the kind of services, benefits and coverage options they are looking for can’t be provided by Medicaid.
Both Long term care insurance and Medicaid have their own pros and cons. In one hand, long term Care offers flexibility and provides coverage options not found within Medicaid benefits. But Medicaid on the other hand, does offer other benefits not provided by most LTC insurance plans like full coverage for as long as needed in a nursing home and from the first day.
Long Term Care Insurance Pros and Cons
Is long term care insurance a smart option for you? Here are the pros and cons of purchasing this service:
Pro: It allows you to stay at your own home and keep your independence for a longer time. Most policies cover the cost of in-home care for healthy seniors, in order to help them with their daily activities such as cleaning, cooking, etc. In order to have the benefits of a policy, you must need assistance with two out of six activities of daily living.
Pro: It helps you reduce financial and emotional stress that a long term care situation causes on you and your family.
Pro: It covers services from $6,000 to $10,000 a month, or even more if medical care is also needed.
Con: The major disadvantage of long-term care insurance is the same as any insurance: you may pay premiums for years and never use the coverage.
Who Needs Long Term Care Insurance
Most long-term care needs are not as long and complicated as you might think. For example, some people use this type of care for a short period to recover from a surgery or an injury, and then go back to their normal life.
The average time a person needs long-term care goes up to two years or less. Only about 25% of people need long-term care for more than two years, and the probability of needing it for more than five years is only 2% for men and 7% for women.
If you are thinking of getting long-term care insurance, the best moment to apply for these benefits or for health aides is in your 50s. At that age, the denial rate is just for the 17% of the applicants, but as you age, that denial rate rises to 45% in most cases.
Long Term Care Insurance Benefits
As we already punctualize, long term care insurance can downside the economical and psychological impact of care costs, but purchasing a LTCI also has other benefits:
- It protects savings and assets for family members.
- Relieves family and friends of caregiving duties, and burnouts.
- Helps you keep financial independence from family and friends.
- Allows you or your loved one to choose where to receive care: in-home, nursing home, senior community, or in an assisted living facility.
- Extends the range of services you or your loved one receives. It can include: care from visiting nurses, home delivered meals, chore services and time in adult daycare centers.
Long Term Care Insurance Requirements
While most insurance companies recommend purchasing a policy as young as 40 years old, there are no age requirements to engage in a long term care insurance payment. Long term care does, however, become harder to get as you age.
The recommended age is waiting until 60, because if you wait too long it can result in more expensive premiums and the overall care costs will outweigh the benefits. As with all insurance, pre- existing conditions are very important when applying for long term care insurance.
Good health is an important aspect when purchasing a long term care insurance. Elderly citizens won’t likely pass the selection process if they already require long term care or suffer from a chronic condition like AIDS, Alzheimer's, Parkinson’s, dementia or metastatic cancer.
Although marital status does not affect eligibility for long term care insurance, it may affect the cost of premiums.
Coverage Options for LTC
Policies usually cover the following services:
- Nursing home
- Assisted living
- Adult day care services
- Home care
- Home modification
- Care coordination
- Future service options (in some cases)
How to Pay for LTC
In order to pay for your long term care, there are a lot of methods and sources you can use:
Personal Funds or Out-of-Pocket Expenses
A lot of seniors pay for care services directly from their personal savings, pensions, retirement funds or the sale of a home. Home care is expensive, and not many seniors can pay out of pocket for aides or LTCI primes, but it remains an option.
Some older adults are eligible for government healthcare benefits (Medicaid, Veteran’s Benefits), which can translate into long-term care benefits.
Private Financing Options
It includes long-term care insurance, reverse mortgages, certain life insurance policies, annuities, and trusts. This is a very common insurance payment option and applies for LTCI as well.
To choose the best option will depend on many factors, like the person's age, health condition, financial status, and the risk or urgency of needing care. These terms should come up when applying for your preferred long term care insurance package, as well as the particular benefits you or your senior loved one will receive.
About the Author
Judy and Bruce Gropper have been married for over 30 years and bring that same passion and love for each other to their community. They are the owners of Right At Home Palm Beach and Palm Beach Gardens, serving the communities of Boynton Beach, Greenacres, Juno Beach, Jupiter, Lake Worth, North Palm Beach, Palm Beach Gardens, Riviera Beach, Wellington.