People are living longer these days, which is good news. But the flip side is that there are more years in which people have a risk of serious health problems. If you or a loved one were struck with a serious or chronic health condition and needed assistance completing regular daily activities, would you be able to foot the bill? Unfortunately, many people seek the assistance of Long Term Care (LTC) insurance when they learn ordinary health insurance and Medicare are not covering these services and it is already too late.
Long Term Care refers to the many services beyond medical and nursing care used by people who have disabilities or chronic illnesses. People who require these services are not necessarily sick in the traditional sense. Instead, they are unable to perform basic activities of daily living, such as dressing, bathing, eating, using the restroom, getting in and out of bed, and walking.
LTC insurance helps you pay for these services, which can be very expensive. Many of these services are not covered by ordinary health insurance and/or Medicare, and Medicaid only pays for the expenses once a person’s assets and savings are depleted. An LTC policy can also ensure that you make your own choices about the services you receive and where you receive them.
Smart Business sought advice concerning Long Term Care insurance from Diana Owens, account executive with JRG Advisors, the management company for ChamberChoice.
What are some of the misconceptions about Long Term Care?
Long Term Care services are not always needed for a lengthy period of time. A person may need care for only a few months to recover from a surgery or illness. Also, Long Term Care insurance is not a benefit that only applies to the elderly. Age is not a determining factor in needing this coverage. Approximately 40 percent of people receiving LTC services in the U.S. are between the ages of 18 and 64.
Approximately 40 percent of people accessing Long Term Care services in the U.S. are between 18 and 65 years old.
What are some of the costs/services that LTC insurance covers?
LTC insurance typically covers:
- Help in your home with daily activities, such as dressing, bathing, eating, etc.
- Visiting nurses
- Assisted living services/residential services outside of your own home that include meals, health monitoring and assistance with daily activities
- Adult day care
- Nursing home care
When is the right time to purchase LTC?
The best time to buy LTC insurance is between the ages of 35 and 50 when there are fewer restrictions and premiums are more affordable. Many people do not think about Long Term Care services or insurance until they approach their 70s and 80s and their health begins to fail. By this time, people may be too high of a risk for an insurance carrier to cover them or, even if they qualify, the premiums can be unaffordable. It is important to note that some LTC policies have restrictions on age and health status.
Is LTC insurance a good fit for everyone?
Long Term Care insurance is an important benefit that should be seriously considered, particularly because people need to stretch their retirement savings through more years since we are living longer. A person’s goal should be to protect his or her assets and minimize dependence on family members. It is wise to shop and compare policies before making a final decision to purchase LTC insurance.
When contemplating the decision to purchase LTC insurance, people should keep in mind that the national average today for nursing home costs is about $72,000 a year and the average stay is two and a half years. Most people do not have enough money saved to pay for these costs.
How are LTC insurance rates determined?
Long Term Care insurance rates are determined by four factors: age, level of benefits, duration of benefits and the health rating the person applying receives. A health rating can be preferred, standard or sub-standard. There are many advantages for an employer offering LTC insurance as a benefit to employees, including group discounts ranging from 10 to 25 percent, coverage available with limited or no medical underwriting and coverage extended to employees’ family members including parents, grandparents and siblings.
Costs for LTC insurance vary, but a survey from the American Association for Long Term Care says a 55-year-old considering a policy worth $110,000 over three years could expect to pay $665 a year if married or $1,075 if single.
DIANA OWENS is an account executive with JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7251 or firstname.lastname@example.org.