The Basics of Long-Term Care Insurance

Posted by Mario Pizzeri on Aug 18, 2016 11:00:00 AM


Long-term care insurance in the United States is gaining traction and becoming more popular as the life expectancy in the US is the highest it has ever been. This form of insurance provides a wide variety of services. Such services range from home care and adult day care to residential care in assisted living or nursing home facilities. With that said, long-term care is generally defined as hands-on assistance provided for an extended period of time to people (of any age, though older people are the primary users) who can't take care of themselves due to a disability, illness or a form of impairment such as Alzheimer's disease. In order to receive long-term care insurance, your physician must deem you no longer able to perform daily activities in your life. These daily activities can include eating and getting dressed.

The policy:

LTC insurance can certainly be overwhelming to understand. Truthfully, even when you do your research, there still may be information that you have missed! 

Luckily, AARP provides this list of what you'll typically see covered in a LTC policy:

  • Home care: An agency or individual who performs such services as bathing, grooming and help with housekeeping.
  • Assisted living: A residence with apartment-style units that makes personal care and other individualized services, such as meal delivery, available when needed.
  • Adult day care: A program outside the home that provides daytime health, social and other support services in a supervised setting for adults in need of help.
  • Respite care: Temporary help to relieve family caregivers.
  • Stays in a nursing home: A residential facility that provides a full range of skilled health care, rehabilitation, personal care and daily activities in a 24/7 setting.
  • Alzheimer's care.

All of these forms of care could be crucial to you and your family in the event of an accident or illness. Without this care, some individuals are left to care for loved ones out of pocket with a great deal of debt. 

The cost:

AARP states that, "According to Genworth Financial, a private room in a nursing home averaged $92,378 in 2016, and a home health aide averaged $46,332. In expensive areas, those costs can nearly double. To estimate costs in your area, use John Hancock's long-term care calculator. And contrary to common belief, Medicare and other forms of health insurance do not pick up the tab, because long-term care is not considered a medical expense. Medicare will only cover skilled nursing care and therapy services following a hospital stay."

To make things brief, unless you think you can cover all of these fees on your own, LTC insurance is more than likely what you will need at some point.  

Choosing wisely:

These policies may not be for you, but it is definitely something to look into. Make sure you crunch the numbers and rationalize with loved ones what the future may have in store such as funds and other retirement plans. Even when you think you have all of the scenarios covered, life has a way of changing that. Many people who purchase LTC insurance obtain it for a worst-case scenario. With that said, LTCI is probably the best way to preserve your assets for future generations of your family. It would be much worse to have your family left with enormous debt than to over cover them with an LTC policy.

Here are a couple of tips to maximize your shopping experience for LTC insurance. 

Purchase young

Premiums are lower if you purchase a policy when you're younger. Your health is more than likely in good condition. This can certainly help. You may be paying for several years, however; attempting to get an LTC policy when you are older and in poor health is much tougher.

As always, look around

Like we have said in the past, shopping around is far and away the easiest method to locating your ideal LTC policy. Talk to potential agents and see what they have to offer The more people you talk to, the more opportunity you have to lock in the LTC policy you desire.



Topics: Long Term Care Insurance

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