Long-term care refers to the variety of services and supports people with a chronic illness, disability, or other condition need on a daily basis over an extended period of time. Most long-term care is non-skilled personal care assistance, such as help with everyday activities like dressing, bathing, preparing meals, eating, transferring to or from bed or chair, caring for incontinence, etc. Long-term care insurance is a type of health care insurance that covers nursing home, skilled nursing, assisted living facility, Alzheimer’s disease care, custodial care, or in-home care costs for people over 65.
Some statistics explaining the need for long-term care insurance include:
- According to the U.S. Department of Health and Human Services, 70% of people turning age 65 can expect to use some form of long-term care during their lives.
- 20% of today’s 65 year-olds will need long-term care for longer than 5 years.
- 97% of people over the age of 85 require assistance in the last year of their lives. (The LTC Report)
- Over 50% of all people entering a care situation are penniless within one year. (Harvard University)
- Singles are at risk because they’re usually not with someone who can properly care for them. The same is true for wives who tend to outlast their husbands by seven years on average.
- Less than 1/3 of Americans aged 50+ have begun saving for long-term care. It can be expensive and may endanger your retirement and other savings. (www.longtermcare.gov)
The average cost of staying in a nursing home for a year is between $55,000 and $100,000, depending upon where you live. Either you plan and save for it, ask your children to pay for it, live abroad where healthcare is cheaper, buy life insurance with long-term care riders, or buy long-term care insurance.
If you did not buy long-term care insurance, you will need to pay for your nursing home and long-term care expenses out of your pocket, or qualify for some long-term care coverage through Medicaid. To qualify for Medicaid, your income must be below a certain level and you must meet minimum state eligibility requirements. Also, you qualify for Medicaid only after you and your spouse have “spent down” almost all your assets. Other federal programs such as the Older Americans Act and the Department of Veterans Affairs pay for long-term care services, but only for specific populations and in certain circumstances. Medicare does not pay for non-skilled personal care assistance.
If you have long-term care insurance, you will receive a maximum daily beneﬁt of $100-$500 for your expenses, depending upon the type of coverage you selected. Your coverage is guaranteed as long as you continue to pay your insurance premiums. You don’t necessarily lose the money you paid for long-term care insurance if you don’t require long-term care during your life. Different insurance plans will have different terms for the return of premiums. Some long-term care programs include a program called “return of premium on death”. If you have this type of long-term care insurance and die without using your entire beneﬁt, your premiums (minus the amount you used) will be returned to your estate.
Buying long-term care insurance is notoriously complicated. There are coverages, inﬂation protection, beneﬁt periods, daily beneﬁt, triggers, and elimination periods, that all need to be taken into consideration. Work with an insurance agent you can trust, to select the best long-term care insurance for your needs.