From D.O.K. Insurance Agency
About Long-Term Care Insurance
At our Renton office, we have the unique opportunity to share an office with an at-home long-term care provider which allows us to understand both the insurance side as well as the care providers. We also attend monthly meetings in which various professionals in the elderly care industry share their experiences and expertise.
We completely understand that thinking about long-term care can be both frightening and overwhelming. It is our goal to provide you with some information but ultimately, you will need to sit down with a professional to make the right long-term care plans.
Click here to read about long-term care from the perspective of a caregiver.
What is Long-Term Care Insurance?
People with a prolonged physical illness, a disability or a cognitive impairment (such as dementia) often need different means of help which is collectively considered long-term care. Generally speaking, a patient needs long-term care after having lost a certain level of independence due to their ailment. There is a common misperception that health insurance will provide a certain level of long-term care. However, there are vast differences between medical (health) and long-term car. While healthcare aims to improve someone’s health or quality of life, long-term care services may include assistance with activities that are part of daily living including those listed below.
What Services Are Covered
Policies may cover the following:
- Nursing home care
- Home health care
- Respite care
- Hospice care
- Personal care in your home
- Services in assisted living facilities
- Services in adult day care centers
- Services in other community facilities
Who Pays For Long-Term Care?
Long-term patients or their families pay for long-term care in different ways including the use of personal resources (assets such cash, retirement funds and investments, or equity of a home), long-term care insurance, or some assistance from Medicaid for those who qualify. It is important to understand that Medicare, Medicare supplement insurance, and the health insurance you may have at work usually do not pay for long-term care.
Does Medicare Pay For Long-Term Care?
Medicare’s skilled nursing facility (SNF) benefit does not cover most nursing home care. Medicare will pay the cost of some skilled care in an approved nursing home or in your home, but only in specific situations. The SNF benefit only covers you if a medical professional says you need daily skilled care after you have been in the hospital for at least three days.
In addition, you must be receiving that care in a nursing home that is a Medicare-certified skilled nursing facility. Medicare may pay up to 100 days of skilled nursing home care per benefit period only when these conditions are met. Also keep in mind that after 20 days beneficiaries must pay a coinsurance fee.
Medicare may pay for nursing home care in specific circumstances, but it doesn’t cover assisted living facilities. While many people would like to receive care in their own homes, Medicare does not cover homemaker services. When you or a loved one find themselves in a situation of needing long-term care, you should work with a liaison right away to make sure services can be provided based on the resources that are available.
Bottom line: Do not expect Medicare to pay for your long-term care needs.
Does My Medicare Supplement Insurance Pay For Long-Term Care?
Medicare supplement insurance is private insurance that helps pay for some of the gaps in Medicare coverage, such as hospital deductibles and excess physician charges above what Medicare approves. Medicare supplement policies do not cover long-term care costs. However, four Medicare supplement policies—Plans D, G, I and J—pay up to $1,600 per year for services to people who are recovering at home from an injury, illness or surgery. This benefit will pay for short-term, at-home help with common activities of daily living. You must qualify for Medicare-covered home health services before this Medicare supplement benefit is available.
Does Medicaid Pay For Long-Term Care?
Medicaid is the government-funded program that pays nursing home care only for individuals who are low income and who have spent most of their assets. Since many individuals retire with very little in savings or exhaust their retirement funds due to costly long-term care cost, Medicaid pays for nearly half of all nursing home care in the US.
However, many people who need long-term care never qualify for Medicaid assistance. Medicaid also pays for some home- and community-based services. To receive Medicaid benefits, you must meet federal and state guidelines for income and assets. Many people start paying for nursing home care out of their own funds and “spend down” their income until they are eligible for Medicaid. Before Medicaid may pay part or all of the nursing home costs you may have to use up most of your assets on your health care. Some assets and income can be protected for a spouse who remains at home.
In addition, some of your assets may be protected if you have long-term care insurance approved under one of the state long-term care insurance partnership programs. State laws differ about how much money and assets you can keep and still be eligible for Medicaid. (Some assets, such as your home, may not count when deciding if you are eligible for Medicaid.) However, federal law requires your state to recover from your estate the costs of the Medicaid-paid benefits you receive.
Contact your state Medicaid office, office on aging or department of social services to learn about the rules in your state. The insurance counseling program in your state also may have some Medicaid information.
The Washington State Department of Social and Health Services, Adult/Senior Services and Information helps you find in-home services, residential care (assisted living, nursing home), resources to pay for care, benefits, legal and financial planning, and aging health information.
Do I Or My Loved One Need Long-Term Care?
- The need for long-term care can be gradually (such as needing help bathing at home) or independent activities of daily living (IADLs) such as household chores, meal preparation, or managing finances.
- The need may also appear suddenly, such as after a stroke or heart-attack severely limits your ability live independently. It is impossible to know when or if you will need the care and once you do, for how long. Some long-term care needs may only be a few months while others will need the care of the rest of their lives.
- Life expectancy has seen a steady increase in recent decades and the longer people live, the greater the chances they will need assistance due to chronic conditions. Here are some important facts to keep in mind:
- About 12.8 million Americans of all ages require long-term care.
- Most persons needing long-term care are elderly. Approximately 63% are persons aged 65 and older (6.3 million). The remaining 37% are 64 years of age or younger (3.7 million).
- The lifetime probability of becoming disabled in at least two activities of daily living or being cognitively impaired is 68% for people age 65 and older
By 2050, the number of individuals using paid long-term care services or skilled nursing facilities will likely more than double from 13 million to 27 million
Of those, only 2.4 million live in nursing homes meaning most of LTC patients receive their care at home.
- According to the U.S. Department of Health and Human Services about 70% of people age 65 and over will need some type of long-term care services sometime during their lifetimes.
- Of those, over half will stay for one year or more.
- Many people will receive care at home, but more than 40% of people age 65 and over will go into a nursing home during their lifetime, and about one in ten will stay there five years or longer.
Do I Need Long-Term Care Insurance?
While this isn’t always a question to answer, asking yourself some question will get you on track to make the right decision. Since some the following questions are fairly broad, we encourage you to talk to our licensed agents.
If some or most of the following questions are “no”, then considering a long-term care insurance policy probably isn’t right for you.
- Do I have retirement funds and other types of savings that would have to be used to pay for my long-term care?
- Do I have any other significant income aside from social security benefits?
- Has my family (i.e. children, younger siblings, etc.) made it clear that they will not be able or willing to take care of me if I need assistance with my daily activities?
If you answer yes to the following questions, we strongly encourage you to look into a long-term care insurance plan:
- Do I have retirement funds, investments, savings or equity in my home that could be depleted by the cost of long-term care?
- Will I have the necessary cashflow to pay my long-term care premium?
- Has your family expressed or are you aware that taking care of you long-term would put a significant financial and emotional burden on them? When considering those you might think will take care of you, we suggest taking the following into consideration:
- Is the individual healthy enough to care for you now, 10, 20 or 30 years from now?
- Can he or she afford to quit their career if the care needs become permanent?
- Are there other individuals that may need that person’s help (for example their own children)?
- Taking care of someone can be very emotionally draining. Are you willing to put that burden on them?
- Do you want to stay independent from the support of others?
Aside from these types of questions, it needs to be understood that if you are already disabled or have been diagnosed with an illness or condition that will require long-term care, you will most likely not qualify. However, please give us a call at 425-242-5252 to make sure that is actually the case. We have seen too many people wrongfully assume that they don’t qualify for a policy or cannot afford it due to an illness.
How can I buy Long-Term Care Insurance?
There are a couple of different options to be protected for long-term care needs. The most common way is by purchasing an individual long-term care policy. Other ways are through an employer sponsored plan (including those provide for US government employees) and having a long-term care option built into a life insurance policy. Since there are a lot of options, you need to speak to a licensed agent to better understand those options. Long-term care is far too important to make a decision based on what a friend says, what a webpage explains or a mailer promises.
How Much Does A Long-Term Care Insurance Policy Cost?
Just to give you a general idea of cost, in 2010 the average premium paid by individual clients was around $2,300 per year. This is based on a person purchasing a policy that is between 55 and 64 years old. Of course, the longer you wait (the older you get), the more expensive the policy becomes. This “average” policy has a daily benefit of about $150, lasting for four to five years, a 90-day elimination period, and a 5% inflation feature. So the maximum lifetime benefit would be around $300,000 for this type of policy.
Limited Long-Term Care Insurance Options
Some insurance companies offer payment options that allow you to pay premiums for a limited period of time, rather than over the life of the policy. Instead of paying premiums as long as the policy stays in force, you make payments for a predetermined number of years or up to a certain age. Common examples include:
- Single pay – one premium payment
- Ten pay – pay premiums for 10 years
- Twenty pay – pay premiums for 20 years
- To age 65 – pay premiums until you turn age 65
You can use cash, certificates of deposit (CDs), annuities, or other resources to buy a limited pay LTC policy. For example, if you buy a policy that offers a single premium payment, you are guaranteed no additional premium charges. The policy includes a set amount of money for your long-term care needs. The longer you have the policy and don’t file a claim, the more money you will have for your LTC care needs. These policies pay a death benefit to your heirs (family or friends).
What Should I Look For In A Long-Term Care Insurance Policy?
Each policy should include the standards set forth by the National Association of Insurance Commissioners (NAIC). These standards require:
- At least one year of nursing home or home health care coverage, including part-time care and help with activities of daily living. Nursing home or home health care benefits should not be limited to skilled care provided by nurses and therapists.
- Coverage for Alzheimer’s disease, if the policyholder develops it after buying the policy.
- An inflation protection option that offers a choice for an automatic increase of the benefit level every year or a right to increase the benefit level when needed without having to provide evidence of insurability.
- An outline of coverage that describes in detail the policy’s benefits, limitations, and exclusions, and also allows you to compare it with others. Your company or insurance agent should also provide you with a long-term care insurance shopper’s guide that helps you decide whether long-term care insurance is right for you.
- A guarantee that the policy cannot be canceled because you get older or suffer a decline in physical or mental health.
- The right to return the policy for any reason within 30 days after you have purchased it and to get a full refund.
- No requirement that the policyholder first:
- be hospitalized to receive nursing home benefits or home health care benefits
- receive skilled nursing home care before getting less skilled or custodial nursing home care
- receive nursing home care before getting benefits for home health care.
What Is Excluded In An LTC Policy?
- Conditions caused by participating in a felony, riot, or insurrection
- Benefits provided under state or federal workers’ compensation, employer’s liability or occupational disease law, or any motor vehicle no-fault law
- Services outside the U.S. or its territories
- Treatment provided in government facilities (unless required by law)
- Benefits provided by Medicare or other government programs (excluding Medicaid)
- Treatment due to an airplane accident (applies only to non-fare paying passengers)
- Services performed by a member of the covered person’s immediate family
- Services for which there is no charge
- Expenses for services or items covered or paid for under another long-term care insurance or health insurance policy
- Treatment for pre-existing conditions or diseases
- Treatment for alcoholism, or drug addiction
- Conditions due to serving in the armed forces
- Illnesses caused by an act of war (whether declared or undeclared)
- Self-inflicted injuries or conditions due to attempted suicide