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What Is Long-Term Care Insurance?

Did you know that approximately eight million people receive support from long-term care services? It’s a known fact that people are living longer. According to the Institute on Aging, there are more than 40 million Americans who are age 65 and older, and that figure is expected to increase as the last of the Baby Boomers reach age 65. A topic on the minds of many people is exactly how they can best prepare for their future health care needs, as well as how to pay for supportive services or senior living accommodations?

So what do they do? They get long-term care insurance, which is a type of insurance developed specifically to cover the costs of nursing homes, assisted living, home health care and other long-term care services. These services are usually not covered by traditional health insurance policies or Medicare.

Long-term care insurance was created to provide coverage to older adults to ensure their future health care needs will be met. There is no “average” cost for long-term care insurance; the costs of long-term care insurance vary and depend on a variety of factors, including your current age and health status, amount of coverage you’re interested in getting and the insurance company.

Your initial first reaction may be: I don’t need or won’t need this type of insurance. Wrong. According to the U.S. Department of Health and Human Services, 70 percent of people age 65 or older will need some form of long-term care in the years ahead, and regular health insurance does not cover the cost of this type of care.

And your second reaction is expected, too: My family will take care of me. Forty or 50 years ago, when Grandma or Uncle Ed couldn’t take care of themselves, they moved in with family members and stayed until they passed away. Nowadays, that might be the original intention, but family members typically can’t continue to take care of an ailing loved one for very long. It places a great strain on them, and studies show that 51 percent of caregivers report that the experience caused stress in their family.

Long-term care insurance is starting to sound a little better, isn’t it?

When researching long-term care insurance policies, it’s important to look for a policy that will cover the types of services and facilities you will need in your area. In general, typical, comprehensive long-term care insurance coverage includes: assisted living, skilled nursing care and rehab, memory care, home health care, adult day services, and respite care.

Generally, benefits begin when you need help with two or three of the Activities of Daily Living (ADLs). Requiring assistance with bathing, eating, dressing, using the toilet, walking and remaining continent are the most common ADLs used. You should be sure your policy includes bathing in the list of benefit triggers because this is often the first task that becomes impossible to do alone.

While long-term care insurance might not be an affordable option for everyone, it’s an important choice to consider for your future health needs. Financial experts recommend that you look for a policy with a monthly premium that is 5 percent or less of your monthly income. Keep in mind that over the years, your premiums could rise while your income starts to decline.

Remember, Medicare only pays for a short-term stay in a skilled nursing facility after you have been hospitalized for at least three days. Then, they will pay for the next 20 days of care needed. This is where your long-term care insurance would come into play, depending on the coverage you have chosen.

Before making a decision about whether long-term care insurance is right for you, talk to a financial advisor and read all the fine print. You should understand the entire outline of your coverage, including the benefits, limitations and any exclusions.

In no way does this article presume solid legal advice. It is to serve as a consumer guide in the
complicated world of long-term care and financial strategies. It is best to consult an elder law attorney who can properly advise and draw up the necessary legal documents.