Long-term-care (LTC) usually means the medical and physical care you need if you have a chronic illness or disability. For example, the care may include help with bathing, dressing, grooming, and eating.
You can get LTC in a nursing or assisted-living facility. You may also be able to have LTC in your own home. Some other types of places, like adult day care programs, also offer LTC. Most LTC is given to older adults, but a person of any age may need these services.
Long-term-care can be very costly. Long-term-care insurance is one way to cover some of the cost.
Most current LTC policies cover care in a nursing facility, in-home services, and adult day care programs. Assisted living is not usually covered.
Most LTC policies start paying for services when you become unable to do some or all of your own personal care. Most policies allow you to choose the service that will be best for your situation. Once it is agreed that you need LTC, the insurance company pays the daily benefit. This payment is usually less than the actual cost of care.
Other types of insurance, such as Medicare, major medical, Medigap, and HMOs do not pay for long-term stays at nursing facilities. They pay for medical care, not day-to-day personal care or room and board. Medicaid, the government program for people with low incomes and limited assets, usually helps pay for long-term care if you qualify.
Not everyone can get LTC insurance. Some LTC policies are not sold to people who have reached a certain age (for example, age 75). Some policies are not sold to people with certain illnesses, such as Alzheimer's disease.
Long-term-care insurance can keep you or your family from having to spend a lot of money if and when you need long-term care later in your life. Many people today are living into their 80s and 90s. The longer you live, the greater the chance that you will spend some time in a nursing facility. Researchers estimate that 40% of people over age 65 will spend some time in a nursing home. Most of the people who live in a nursing facility long term are over 80. Women are more likely than men to need LTC because they tend to outlive their spouses. There may be no one at home to care for them.
A 1-year stay in a nursing facility may cost $50,000 to $75,000 a year. This kind of expense can wipe out a family nest egg. It can leave a spouse without enough money for living expenses.
Here are some things to think about:
For most LTC insurance, you pay a premium and the insurance company agrees to pay a certain daily amount to help cover the cost of long-term care when you need it. Most LTC insurance policies do not cover the full cost of LTC. Most plans limit the number of years or the amount they will pay.
Some long-term-care policies pay only for care at a nursing facility. Other plans will also pay for care in your home. They may cover services not covered by Medicare or Medigap insurance.
Policyholders can usually choose benefits of about $50 to $150 a day to be paid by the insurance company for their care. Some companies set the daily amount and then the policyholder can choose what type of care the insurance will pay for. Other companies set different payments for different types of care. For example, the payment for care in a nursing facility might be higher than for adult day care.
The cost of LTC insurance varies greatly. Average premiums range from $2,000 to $4,000 a year. Premiums depend on how old you are and your physical condition when you buy the policy. They also depend on the level of benefits you choose and an estimate of when you may need benefits. The younger you are when you buy long-term-care insurance, the lower the premiums are. However, if you buy the policy at a younger age, you will be paying premiums for more years before you are likely to need long-term care. You may choose to add a delay period (called a deductible period). This means that when you start needing care, you will personally pay for services for the stated time period in return for lower premiums.
Talk to representatives from several companies to compare prices and benefits. Ask for summaries of the policy benefits, and then look at each policy side by side. Be sure you understand the differences. When considering a policy, here are some important questions to ask:
Take your time before buying. Have everything in writing. Don’t let yourself be pressured into buying over the phone. Never buy a policy from a door-to-door salesperson. Ask for references that include customers who have had claims paid. Talk to these customers about their experiences. Find out how quickly the company paid claims and any complaints the customer had. Never buy more than 1 long-term-care insurance policy. One company will not pay if another is covering the same benefit.
Some senior groups and hospitals may have helpful information. You can also contact your state's insurance commission. Ask if there is a comparison guide or counseling program to help you.
Many companies sell LTC insurance. For information about companies that offer policies in your state contact:
America's Health Insurance Plans
Phone: 1-202-778-3200
Web site: http://www.ahip.org.
