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Long Term Care Insurance & The Five Most Frequently Asked Questions
What is Long Term Care Insurance?
It's the care people need when they can't perform the tasks of
ordinary living by themselves -- things like bathing, eating, dressing,
toileting, continence, and moving around. Or, the person may need care
and supervision due to a cognitive impairment such as Alzheimer's
disease.
Who should consider long term care insurance?
Everyone, with a few exceptions: You do not need long term care
insurance if you have little or no assets and can qualify for Medicaid,
or if you have excess wealth and choose to self-insure.
What types of care are there?
When people need care for any illness or accident, it may fall into
one or more of the following categories:
- Acute Versus Chronic Care: Acute care is the type usually provided in
hospitals and emergency rooms: treatment of stroke, heart attack, and
pneumonia, for example. Chronic care is usually for conditions that are
treatable but generally not completely curable: arthritis, diabetes,
hypertension, and Alzheimers, for example.
- Skilled Care: Usually delivered in skilled nursing homes, this type of
care can also be received in one's home. If the skilled care meets
strict criteria set forth by Medicare, then the provider is referred to
as a skilled nursing facility (SNF). Medicare defines skilled care as
services and rehabilitation that require technical or professional
personnel such as registered nurses, licensed practical nurses, and
physical or occupational therapists.
- Non-Skilled Care: Also known as custodial care, this type is provided to
persons who need help on a regular basis with activities of daily living
-- because of a physical limitation, chronic problem, or a cognitive
disorder. The care can be given by any non-skilled individuals including
family members.
Long term care insurance may be appropriate for all the above care
except skilled care covered by health insurance or Medicare.
Where is long term care provided?
Not just in nursing homes, which many people assume, but in a variety
of settings:
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In one's own home: Most long term care recipients live with their
families. About 1.5 million Americans are cared for at home by paid
helpers, who provide skilled or unskilled care with basic personal
activities. Another 5.5 million Americans receive unpaid help at home
from family members.
-
Skilled Nursing Facilities: Also known as nursing homes, these
institutions are usually comprised of two separate units, one that gives
skilled nursing care (which may be covered by Medicare), and one
providing non-skilled or custodial care (which may be covered by long
term care insurance). The goal of the "Medicare" unit is to provide
services needed to rehabilitate patients so they can go home. However,
often patients are unable to return home and are moved over to the
non-skilled or custodial unit.
-
Assisted-Care Living Facilities: Also known as assisted-living
facilities or residential care facilities, these institutions provide
non-skilled care for people who need help with daily living but can also
provide much of their own care. These institutions are an excellent
alternative to nursing homes. The residents may live in apartments that
they can personalize.
-
Adult Day Care centers: These community-based services were developed to
help people stay at home rather than moving prematurely into nursing
homes. The centers offer custodial care during weekdays and sometimes on
weekends too.
What does long term care cost, and who pays?
The cost varies depending on state of residence and type of care
(nursing home, in-home, etc.). Nursing home services currently average
close to $80,000 per year. Costs are projected to rise dramatically in
the years ahead.
There are four options for paying. The individual needing care may --
- Rely on family (spouse, children, etc). Appropriate only when there is a
support system in place with available time, money, and accomodations.
- Self-insure and pay for long term care with one's own assets and income.
Recommended only for the very wealthy.
- Spend down all assets and then qualify for Medicaid (Medi-Cal in
California). New federal legislation passed in 2005 makes this option
more difficult and less attractive than it was in the past.
- Transfer a predetermined amount of the long term care risk to an
insurance company. In other words, buy a long term care insurance
policy. The best option for most Americans.
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