Let's try to keep this simple...
Your health today is probably the BEST it will be for the rest of your life. As we age, the chances of becoming ill and incapacitated rise dramatically.
Each day, after we awaken, we perform 6 activities without ever giving it a second thought. This is normally how our routine goes: we transfer from our bed and walk to the bathroom (it's time to head there since we maintained continence all night while sleeping). We do our toileting, then bathe or shower and get dressed. Now it's time for breakfast - so we prepare the meal, sit down and eat.
These are also known as the Activities of Daily Living (ADLs) - bathing, continence, dressing, eating, toileting & transferring.
Most of the time we routinely perform these
activities subconsciously - that's until we suffer an illness, then things are not so easy anymore.
What exactly is long-term care?
Basically, long-term care is help (someone providing care for you) in your own home, in adult day care, in an assisted living facility or in a nursing home which will last for at least 90 days.
Most people receive this help from family or friends creating an emotional and financial burden on these caregivers. Others use their savings to pay for professional caregivers to do the work putting a strain on their finances since this care is very expensive.
What are the odds that you will need this type of care?
The need for long-term care can happen in an instant or gradually as a person's health declines. Some of the reasons for receiving long-term care include: chronic disease, prolonged illness, injuries sustained as a result of an accident, disability, or cognitive impairment such as Alzheimer's Disease that limits a person's ability to think or reason.
We all think we won't need long-term care. Yet, Americans are living longer than ever. The longer you live, the more likely you may become ill or have an accident and need some type of long-term care. In fact, you may already know of friends or family members who have needed long-term care. A sudden illness or injury can happen at any age.
The odds of entering a nursing home, and staying for longer periods, increase with age.
(A Guide to Long-Term Care Insurance, published by America's Health Insurance Plans (AHIP), August 2004.)
The best way to determine the odds of you getting sick and needing long-term care is to take a look at some statistics.
A sad fact is that you have insured your car and home just in case you have an accident or damage to your property but you have probably neglected to cover the increasing risk of needing long-term care if you become ill. Statistics show that your long-term care risk is by far greater than having a car accident or damage to your home.
There's a better way for most folks to take care of this risk and not wipe out their savings.
It's call Long-Term Care Insurance.
Just in case you expect your health insurance or Medicare to pay for long-term care if you become ill, you'd better discover now that this will not be the case. Health insurance generally pays your hospital expenses and your doctor. Medicare is the federal government's health care program for people over age 65. Neither pays for long-term care unless that care is skilled rehabilitation for a very restricted period of time.
This is where Long-Term Care Insurance comes into play. This type of insurance protects you from the risk of having to use your savings to pay for care. Without Long-Term Care Insurance you will have to spend your own money (usually after retirement) creating a tremendous financial burden on families.
• Most private medical and major medical insurance plans do not cover long-term care.
• Medicare generally covers some nursing home care, but only for a limited time.
• Disability insurance only replaces lost income.
• Medicaid pays only for nursing home care after you have spent most of your assets.
That's why many Americans are looking at Long-Term Care Insurance.
"My kids say they will take care of me..."
You probably have wonderful children who will try to help if you become ill and incapacitated. The fact is they also have their own lives and families to care for and caregiving involves tremendous patience along with countless hours. Caregiving usually causes a great deal of stress for both the caregiver (children) and the patient (parent) if this is the only alternative down the road.
Why not help the situation by taking out Long-Term Care Insurance to maintain your independence and choice of care, eliminate the chance of becoming a burden to your family and avoid the possibility of outliving your money.
Let's look at the three types of care:
Skilled Care - (½ of 1% of all care provided)
A level of care which requires the training and skills and 24 hour-a-day supervision of a Registered Nurse, is prescribed by a doctor, and which may not be provided by less skilled or less intensive care. Skilled Care may be defined differently by Medicare than by insurance companies.
Medicare will generally pay for Skilled Care only for limited periods of time, when such care is expected to improve the medical condition of the patient, and when it is delivered in a Participating Skilled Nursing Facility. Medicare will not pay for such care when no medical improvement is expected, as is the case in many Chronic Conditions.
Intermediate Care - (4½% of all care provided)
Occasional nursing and rehabilitative care ordered by a doctor and performed or supervised by skilled medical personnel. A less-intensive type of care than Skilled Care, often involving a lot of Personal Care as well as occasional nursing care.
Custodial Care - (95% of all care provided)
True long-term care-sometimes also known as "custodial" care-refers to a variety of services that help a person with comfort, personal, or wellness needs.
These services assist in the activities of daily living (ADLs), including such things as bathing, dressing, using the bathroom, transferring from a bed to a chair, etc.
Medicare will not pay for long-term custodial care in a nursing facility. However, it may pay for recuperative care in a nursing facility after a hospitalization. There are restrictions on the length of time Medicare will cover services in a nursing facility.
Medicare and health insurance generally will cover Skilled and Intermediate Care for a limited amount of time under certain conditions and will only help with Custodial Care if it's provided along with Skilled or Intermediate Care.
You will have to spend down your assets to acceptable levels to try and qualify for your state's Medicaid program.
Now it's Custodial Care that we need to discuss. Most folks will need Custodial Care (help with bathing, continence, dressing, eating, toileting, and transferring - also known as The Activities of Daily Living) as they age if they become incapacitated.
As you have seen earlier - long-term Custodial Care is very expensive and becoming more so each year. All three types of care are provided by Long-Term Care Insurance.
Here are the BASICS to make it easier to understand how Long-Term Care Insurance works. You will be asking the insurance company for certain benefits:
- The amount of insurance that you’d like per month for long-term care (for example $4500 per month)
- A waiting period - which is the number of days you would be willing to provide for your own care before the insurance policy takes effect (for example 20 calendar days)
- The number of years you would like to receive long-term care benefits once you become eligible for a claim (after you become incapacitated) (for example 4 years)
- Inflation protection so that your benefit will continue to grow before you need long-term care (for example 5% compound inflation protection)
The amounts you choose, along with your age and health history will determine the cost of your Long-Term Care Insurance policy.
Working with a Long-Term Care Specialist is very important because we have the knowledge, expertise and claims experience to help you design a plan properly. Remember, the benefits you choose will determine if the policy will work to meet your needs in the future when you need care. Choosing the wrong benefits will not make things go smoother down the road and can cause additional emotional and financial distress.
Let's talk about your health and see if you could qualify for insurance...
Many people falsely assume that they should look into Long-Term Care Insurance after they turn 60. The sad fact is that by that age many have already suffered health ailments making them uninsurable.
We'll let you in on a little secret - it's always better to buy insurance when you are younger and healthier. We advise studying different plans and purchasing a policy if you can afford the coverage and are young (usually between the ages of 40-60) and healthy. This will provide you with a more affordable plan and not risk the possibility of becoming uninsurable and unable to buy protection down the road.
Many 40 and 50 year olds have also already begun to suffer health conditions which can make them uninsurable such as complications from diabetes, heart conditions, mini strokes, etc. Waiting to cover yourself is a dangerous proposition - we all know how healthy we are today - none of us knows what our health will be like tomorrow.
The sooner you look into this valuable coverage - the better. Once you are afflicted with certain health conditions, you will be considered uninsurable - then the door is closed on insurance. You will HAVE to use your own assets to pay for your long-term care down the road.
Now let's do the math:
The average length of time a person needs long-term care in their lifetime is 2½ to 3 years.
The average cost of care for one year nationwide in 2012 was approx. $96,000 - for an average cost of $288,000 for 3 years of care.
But please remember - these are TODAY'S costs for care.
It is estimated that in 25 years, when Baby Boomers reach retirement age - these same costs could exceed $750,000 for 3 years of nursing home care.
The obvious question is:
"Do you want to risk having to pay for this care with your own assets?"
The obvious answer should be:
"If you are more comfortable paying for a Long-Term Care Insurance policy than possibly paying for long-term care with your own money - then you should look into Long-Term Care Insurance as soon as possible."
Before you purchase a policy from any company, here are a few terms you should know about:
Activities of Daily Living
Hands On Assistance
Calendar Day Elimination
Service Day Elimination
Guaranteed Purchase Option
Simple & Compound Inflation
Pool of Money
Restoration of Benefits
Exclusions & Limitations
People WITH Long-Term Care Insurance receive an average of
14 MORE HOURS of
personal care PER WEEK than those WITHOUT insurance.
An OVERWHELMING MAJORITY -
97% of policyholders receiving benefits from their Long-Term Care Insurance policy are SATISFIED with how their claims were handled - according to the U.S. Department of Health and Human Services.
With the COST of Long-Term Care rising so dramatically, is it wise to remain uninsured causing you to use your savings and retirement to pay for your care thus creating a tremendous burden on your loved ones?