Long Term Care Insurance

Long Term Care Insurance covers the medical care, nursing care, and other help you might need (at home or in a nursing home) if you were unable to care for yourself over an extended period.

Contrary to popular belief, Medicare and most other types of Health coverage (including Disability insurance) do not cover the costs of long term care.

Long term care can be very expensive: The annual cost of nursing home care ranges from $30,000 to $80,000, while home or community care can cost $12,000 to $50,000 per year. If you, your spouse, or family member were to need long term care, the cost could deplete more than your own hard-earned assets — and without LTC insurance, the financial burden of this care could fall on your family. A single year of paying for long-term care would impoverish 72% of elderly Americans.

Long Term Care policies pay $40 to more than $200 a day for covered care in a nursing home. The daily benefit for at-home care is usually half that of nursing home care. Most policies also offer an inflation adjustment feature.

Federal law might allow you to take certain income tax deductions for some long term care expenses and insurance premiums.

LTC: A DEMOGRAPHIC DISASTER

The number of Americans over 65 is increasing, while the younger population is stagnating, a trend that will put pressure on aging services, including long-term care.

During the next 20 years, our aging population will create a huge drain on state Medicaid programs, currently the main source of nursing home funding — and the chances of Congress creating a new federal long term care entitlement program are slim.

DEFINITIONS

Long-term care insurance covers the supportive medical, personal, and social services needed by people who are unable to meet their basic living needs for extended periods, due to accident, illness, frailty, or cognitive disimpairment (such as Alzheimer's). Such conditions include the inability to move about, dress, bathe, eat, use a toilet, or medicate. The disabled might also need help with housecleaning, cooking, shopping, paying bills, and medical visits.

Long term care insurance requires a healthy person to provide support. Although both the disabled person and so-called informal caregivers (family and friends) usually prefer home care, the deciding factor of where to receive help depends on the nature of the disability. For example, a wife caring for her overweight husband might be unable to help him bathe, dress, use the toilet, or even transfer himself from the bed to a chair. She'll either have to hire aides to come to the home or put him in an institution. Another example might be an Alzheimer's patient who has become unmanageable and must receive constant supervision that's impossible to provide at home.

MYTHS AND FACTS

Don't let these myths stand in the way of getting the long-term care protection you and your spouse need:

“I'm Too Young.” A lot of us think that only senior citizens need to worry about long term care, so we put off preparing for the possibility. The fact is that untimely accidents or illnesses can strike at any age. Although 60% of people who will need long term care are 65 or older, 40% are working age adults between the ages of 18 and 64. Would you be prepared for long-term care, if you suddenly required it?

“I Can Save Enough on My Own.” The average nursing home stay is 2.6 years and the annual cost of a semi-private room is $52,000. By the year 2030, it's estimated that this cost will rise to $190,600.

In 2000, the average cost for an assisted living facility was $25,300. By the year 2030, this figure is projected to be $109,300.

The national average annual cost of home care in 2000 was $15,000 — expected to climb to $68,000 by 2030.

Will you have saved enough to cover these types of expenses? And, if you have that much money, will you want to spend it for long term care services?

“LTC insurance is too expensive.” The younger you are when you buy LTC coverage, the lower your premiums.
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Quotes

"In health there is freedom. Health is the first of all liberties." - Henri-Frederic Amiel

"Happiness is nothing more than good health and a bad memory." - Albert Schweitzer

"Be careful about reading health books. You may die of a misprint." - Mark Twain

Resources

American Health Care Association
National Center for Assisted Living
Medicare

FAQ

Q: Are nursing homes just for the elderly?
A:
A nursing home is generally defined as an entity that provides skilled nursing care and rehabilitation services to people with illnesses, injuries or functional disabilities. Most facilities serve the elderly. However, some facilities provide services to younger individuals with special needs such as the developmentally disabled, mentally ill, and those requiring drug and alcohol rehabilitation. Nursing homes are generally stand-alone facilities, but some are operated within a hospital or retirement community.

Q: How much does the average nursing home cost per day?
A:
Although, by 2002 numbers, the national average daily cost for private nursing home care is $150, the cost varies widely from state to state, according to a 2002 survey conducted by GE Financial's Long-Term Care Division. The survey evaluated the daily cost of assistance in a nursing home for a person suffering from debilitating conditions, such as Parkinson's disease. It did not include costs for therapy, rehabilitation or medications. Alaska topped the list with an average daily nursing home cost of $448; Louisiana has the lowest cost at averaging $99.