Aging baby boomers and new medical technology that prolongs life have increased the need for long-term care. Long-term care is something Americans of any age should be thinking about, but most people are not aware of or prepared for the cost.
Long-term care refers to a wide range of medical and non-medical services – including custodial help with daily activities, nursing care and skilled nursing services – for people who are physically or mentally unable to care for themselves. Home health care, adult day care, respite care, assisted living and nursing home care all fall into the category of long-term care.
Long-Term Care Insurance Critical for Any Age
A long-term care insurance policy can help cover the expenses incurred for long-term care. Many people mistakenly assume that long-term care insurance is only for the elderly, but a third of all individual long-term care policies are purchased by people younger than 65. The coverage is critical for a person of any age; plus, it can be more economical to purchase such coverage when younger.
Anything can happen to anyone at any time resulting in the need for some sort of care. It is not uncommon to find a person in their 30s in a nursing home because of a debilitating accident.
Other Coverages Inadequate
Other types of insurance or government programs don’t provide the amount of coverage available in a long-term care policy.
- Health insurance policies typically do not cover long-term care costs such as nursing homes or assisted living facilities. Also, most policies don’t pay for adaptive equipment, special transportation needs or home modifications.
- Many Americans assume that Medicare will cover these costs. However, coverage is limited and may still require large out-of-pocket expenses. Also, Medicare pays for skilled nursing facility care only after a discharge from a three-day hospitalization. It does not pay for custodial or intermediate care, and the majority of care provided in nursing homes is custodial, which includes assistance with dressing, eating and moving around.
- After an individual has exhausted all of their assets, they may qualify for coverage under Medicaid. However, with Medicaid an individual and their family members lose choice over the care received.
A long-term care policy can save you from having to deplete your assets for care and can prevent you from being at the mercy of the state. In some sense it’s lifestyle preservation to ensure you have a choice in your care. At the same time, it’s asset preservation – it allows you to pass something to your heirs.
It Pays to Shop Around
Here are some things to look for when shopping for a long-term care policy:
- Purchase a policy from a company that is financially strong. Be sure they will be there when you have a claim.
- Select an agent who is experienced with long-term care and with whom you feel comfortable.
- Consider purchasing compound inflation protection because the cost of care is expected to increase considerably over the next 10-20 years.
- Weigh the difference between a lifetime policy and a limited benefit policy. In many cases, the premium difference between a five-year policy and a lifetime policy is minor.
- Grant Barra
Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra
Connect with me at www.linkedin.com/in/gbarra
