What is Long-Term Care Insurance
Long-term care insurance is a policy that helps individuals cover care expenses when they have a chronic medical condition, disability, or disorder. Long-term care assists with daily activities and can be used within an individual’s home, a nursing home, or an assisted living facility.
An LTC policy outlines events that trigger qualification for benefits. Examples include:
Do I need this coverage?
70% of people over 65 will need some form of long-term care in their lifetime.
Many think Medicare is the solution…this is a very dangerous myth… Medicare will only cover a nursing home stay for up to 100 days but there are strict guidelines to follow. The care provided must be skilled care and it has to be in a Medicare-certified facility and only after a hospital stay of at least 72 hours.
Care must be designed to get the patient better. Medicare pays the first 20 days in a certified facility at 100%. Over the next 80 days, the patient is responsible for a daily ($185.50 co-pay) and Medicare pays the rest. Skilled care beyond 100 days is not covered by Medicare.
Then there is Medicaid… Medicaid pays the largest share of LTC services across our country. To qualify for Medicaid, however, your income must be below a certain level (which is set quite low). You also need to meet minimum eligibility requirements in your state. When this happens you lose control of how you will be cared for and where you will be.
The Cost of Long-term Care
As the need for care increases, so does the cost of care. Genworth Financial has tracked care costs for 17 years. In 2020, it reports national monthly median costs as the following:
The cost of that care varies based on the care setting, geographic location, and level of care required, among other things. The cost of care today is expected to nearly double over the next 20 years.
Benefits of LTC Insurance
You may be thinking of LTC insurance as yet another thing that you have to pay for each month. Before jumping to conclusions about costs, let’s examine the benefits of having long-term care coverage should you need it.
LTC will help protect your retirement savings
If you suddenly need long-term care and have no plan in place, it can eat up your savings quickly. Over 50% of all couples where a spouse needs care will become impoverished in less than 12 months. LTC insurance will help protect your hard-earned retirement savings.
LTC gives you more options
If you don’t have LTC insurance or enough private funding to afford long-term care, you will likely have to rely on government aid. This can limit the available options for long-term care locations, which may lead to being in a facility that isn’t your first choice. LTC insurance offers you more choices for where you want and how you receive care.
Alternative Coverages to Consider
For more information about what your Long Term Care planning options will be, please feel free to call our office and we will help answer all of your questions.
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