COVERAGE OF LONG TERM CARE INSURANCE
What does LTC cover in your insurance policy?
Long Term Care typically covers Nursing Home Care, Assisted Living Facilities, Adult Day Care and Home Health Care. Long Term Care policies typically cover services which are not covered by standard health plans or Medicaid. Benefits are usually triggered when the insured person needs help with two activities of daily living, due to an accident, illness, Alzheimer’s disease, or just by natural aging. The six activities of daily living are eating, bathing, dressing, toileting, transferring, and maintaining continence.
Today an astounding 1 in 7 people in a Nursing Home are under the age of 65. This amounts to an approximately 15%. Accidents and illnesses can happen at any age, and many financial advisors recommend considering Long Term Care Insurance at a young age. The advantage of buying a Long Term Care policy when you’re younger is the premiums are substantially lower.
Long Term Care basic coverage typically includes:
Nursing Home Care: Care in a licensed nursing facility
- Assisted Living: Care in a licensed assisted living facility usually at 100% of your daily or monthly maximum. Some plans only cover 50% or 75% of care in an assisted living facility.
- Home Health Care: Care in your home by a licensed home health agency. Coverage may include part time services, including physical therapy, skilled nursing care, and custodial care (help with the activities of daily living).
- Adult Day Care: Care in a licensed adult day care facility. Most policies cover this option, but some do not. Coverage usually includes nursing care, educational care, social care, and personal supervision in the case of Alzheimer’s disease.
Options Long Term Care policies may have:
- Respite Care: Many policies pay to give the primary caregiver a little time off and will pay for temporary replacement.
- Home Assistance: Help with chores like cleaning, cooking, housekeeping, and shopping.
- Recovery Period Benefits: Temporary care to recover after a stay in the hospital or other medical facility.
- Bed Reservation: If you leave the nursing home for a short amount of time, your bed will be paid for by the insurance company.
- Return of Premium: If you never use your Long Term Care policy, your estate can receive all the money back upon death
- Caregiver Training: If you have someone you would like to take care of you, but who need to be trained, this option will pay for training. Relatives or family members of the elderly, or anyone can be trained
There is a common misconception that Health Insurance or Medicare will pay for Nursing Home Care
Health Insurance or Medicare will not pay for Long Term Care.
- Health Insurance only pays for expenses for medical cost such as surgery, medical test, medicine, doctor’s visits and other similar services. Health Insurance does not pay for Long Term Care.
- Government programs such as Medicare will only fully cover Nursing Homes for the first 20 days.
- Medicaid will pay for Nursing Home Care, but a person must deplete their assets to the poverty level. In most states you can only retain $2000 in countable assets, and couple can only retain about $3000 in countable assets.
At what age should I purchase Long Term Care Insurance?
According to American Association of Retired Persons in 2010, between 7 and 9 million people has private insurance that covered the cost of Long Term Care. The average age of a first year policy holder is 58 years old (according to Genworth). Financial planners say that the younger you are is the best time because you can save substantially on the premiums. Furthermore, if you wait, rates will increase, and you may be denied coverage due to poor health. Long Term Care Insurance will help protect your family from a financial burden, and allow you to leave an estate to your loved ones, rather than depleting all of your assets.
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Carriers quoted will vary from state to state.)