Growing older will eventually happen to everyone but getting to a ripe old age only befalls an elite few who have espoused clean and healthy living. Others have failed to value this but clung luckily to the warm embrace of life. Nevertheless, one fact remains whenever you do reach this “senior citizen” status: you will need long-term care.
Upon reaching sixty-five years old or older, some may need assistance with basic daily activities at home like eating, bathing, and dressing, or community services such as transportation and adult day care, or ongoing care in an assisted living residence, nursing home, or other facilities. You will need funds to pay for these services and one alternative is to use long-term care insurance.
What is Long-Term Care Insurance (LTC)?
Long-term care insurance is a type of coverage that allows for home health care, nursing home care, and adult or personal daycare for people ages sixty-five or older. It also includes people with disabling or chronic conditions that require constant supervision. It provides more options and flexibility than other public assistance programs similar to Medicaid, which rarely covers LTC.
Key Points of LTC
- It is a type of private insurance for anyone with access to it and who can afford it.
- It usually covers all aspects or parts of in-home care and assisted-living homes for people sixty-five years or older, or with people with disabilities and chronic conditions that need care constantly.
- Coverage for full home care is one alternative.
- It covers expenses like a live-in or visiting caregiver, housekeeper, companion, private-duty nurse, or therapist up to seven days a week, twenty-four hours per day, up to the maximum of the policy benefit.
- It provides more alternatives and flexibility than Medicaid.
- Many LTCs cover only a specific dollar amount for each home-care visit or each day spent at a nursing facility.
- Always read the fine print thoroughly when selecting the appropriate LTC to meet the best basic needs.
Understanding LTC Further
Many people are not able to care for themselves anymore, and some do not have family members to help them, so instead they purchase long-term care insurance to cover out-of-pocket costs. Otherwise, the funds to pay strictly for this will quickly be depleted.
It is best to shop around LTCs between the ages of forty-five and fifty-five, and it is less expensive when purchased around these ages. The best one chosen will be part of an overall retirement plan to protect from the burdens and high costs of extended healthcare.
Why it is Important to Buy LTC
Regular health insurance does not cover LTC, it is best to purchase it before reaching the age of sixty-five years old since seventy percent of people of this age may need support or long-term care services, according to experts in this field. Generally, men need care for an average of 2.2 years, and women require about 3.7 years.
How LTC Works
When you decide to sign up for an LTC policy, the insurance agent will ask you to complete an application and answer health questions. You may have to show your medical records and be interviewed in person or by telephone.
You will then select your preferred amount of coverage. LTC insurance policies are usually capped by the amount paid during your lifetime or the amount paid per day.
Upon approval of the policy issued and coverage, you will start paying the premiums. Most LTC policies still provide eligibility for benefits for two out of six “activities of daily living” or ADLs, on your own or suffer from cognitive impairment like dementia.
The ADLs are:
- Eating
- Dressing
- Bathing
- Getting on or off the toilet
- Getting in and out of a bed or chair
- Caring for incontinence
When you want to make a claim and need LTC, the insurance provider will examine your medical documents and might send a nurse to evaluate you. Before your claim will be approved, the insurance provider must approve your LTC plan.
Most LTC policies will let claimants pay out-of-pocket for a certain amount of time like thirty, sixty, or ninety days before the insurance provider will start reimbursing them for the care, which is called the “elimination period.”
The insurance provider will begin paying out money after you are eligible for benefits and generally after receiving paid care for some time. Most LTC policies will pay a daily limit for care until reaching the lifetime maximum.
Some insurance companies provide shared care alternatives for couples when the two of them bought policies. It will let you share the total coverage amount, so you can draw from the pool of benefits of your partner if you reach the policy’s limit.
How Much Does LTC Insurance Cost?
Your particular LTC insurance rates will depend on various factors like:
- Gender – Females typically pay more than males since they have a longer life expectancy and have more chances to make LTC insurance claims.
- Health and age – The older a person becomes the more health issues come and the more reason to pay for the policy.
- Insurance provider – The rates for the same amount of coverage among insurance companies will differ, and it is for this reason you need to compare quotes from various providers to select the best and most affordable one for you.
- Marital status – Married people will pay lower premiums compared to singles.
- Amount of coverage – You will pay more for more coverage like higher limits on the lifetime or daily benefits, cost of living alterations for protection against inflation, fewer restrictions on the type of care, and shorter elimination periods.
Things to Consider Before Buying LTC Insurance
- Your financial situation – You will need to take a close look at your assets and spending first. Some have sold their second home, gotten a reverse mortgage, or downsized from a family residence. Others have arranged a longevity fund to cover LTC and other related expenses.
- Review the full range of insurance alternatives – Talk to all insurance providers and financial advisors in your area and choose one who can put your overall financial plan into action.
- Few ways to pay for the policy – If you have a healthcare savings account (available only to consumers in select health plans) you can use it to cover premiums, tax-free. You can also exchange an existing life insurance policy for an LTC policy.
How to Save on LTC
- Tax advantages – LTC insurance has tax advantages once you itemize the deductions, particularly when you get older. Some state and federal taxes will allow you to count a portion of the entire LTC insurance premiums as tax-deductible medical expenses if they meet a particular threshold. The premium limits you can deduct will increase once you grow older.
- Couples buying individual policies – Couples can qualify for “shared care” after buying individual policies. If one uses up the pool of benefits, one can use the partner’s pool.
- Group policy – A group policy through your employer can be more affordable than an individual policy, especially if you have a health issue.
- Buy the right one for you – As mentioned earlier, you will need to shop around various insurance providers for the appropriate LTC insurance for you, this way you won’t pay for something you don’t need in the future. It is best to purchase LTC insurance between the ages of 45 and 55, as a portion of your overall retirement plan in protection of assets from burdens and high costs of extended healthcare.
Conclusion
When you have reached the age when you need to make a long-range financial plan, the cost of long-term care insurance is one essential aspect you have to think about. Talk to a financial advisor for the best LTC insurance for you.
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