Is Long Term Care Insurance Worth It In 2020? We have Answers

By: Rosemarie Tamunday Casanova — RN, BSN, MHA

As someone who is caring for a spouse, a parent, any other member of the family, or a close friend, the issue of long term care insurance is something that will almost inevitably crop up with time. This may be hard to think of now, but it could also be you who would be needing long term care insurance later.

If you’re concerned about how you’re going to pay for the costs of long term care (as you should rightly be), then you should be thinking about purchasing long term care insurance. Considering the cost of long term care insurance is an important aspect of any long-term financial plan, particularly in your 50s and after.

It may not be wise to wait until you have need for care to purchase insurance coverage. This is because you will not qualify for a long term care insurance plan if you already have a debilitating health condition. Most individuals who have long term care insurance purchase them in their mid-50s - mid-60s.

Whether or not long term care insurance is the right choice would be a function of your situation and your preferences.

WHY YOU SHOULD CONSIDER LONG TERM CARE INSURANCE

According to a United States Health study, about a half of 65 year olds today would eventually develop a disability that’d need some long-term care services. Most of them would require services for about two years or less, but about 14% would need care for over five years.

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According to The National Association of Insurance Commissioners (NAIC), an estimated 70% of individuals aged over 65 years are expected to need some sort of long-term care at least once during their lifetime, and about 35 % of them are expected to receive care at least once in a nursing home, with an average duration of stay of a year.

In spite of this, the National Bureau of Economic Research says that only about 10% of elderly individuals have private long term care insurance plans. As most people are aware, regular health insurance does not cover costs of long-term care.

Medicare only covers short stays at nursing homes, or a limited amount of home health care, in the event that you need skilled nursing or rehabilitation. It does not cover for custodial care that includes supervision and assistance with daily tasks.

If you do not have insurance to cover long-term care, then you’d have to pay for it out of pocket. Help may be obtained via Medicaid, which is the federal & state health insurance program designed for individuals with low incomes. However, this would be only after you’ve exhausted the bulk of your savings.

WHAT IS LONG TERM CARE INSURANCE?

Initially introduced as “nursing home insurance” back in the 1980s, a long term care insurance policy will pay for the expenses of care arising from a chronic illness, injury, or disability. It also provides the person with the aid they may need due to the general effects of aging.

Long term care insurance is primarily designed to help with payment for the costs of custodial & personal care, as opposed to strictly medical care.

In this regard, long term care insurance is not like traditional health insurance, as its purpose is to cover for expenses that are associated with senior long-term care services and support, irrespective of where the care is provided - at home or in an assisted living community, in a skilled nursing facility, or in any other senior care setting.

Photo by Scott Graham on Unsplash

WHAT DOES LONG TERM CARE INSURANCE COVER FOR?

Based on the types of insurance coverage the policyholder thinks they would require, and of course, the premium amount they can afford, a long-term insurance policy can provide coverage for one or several types of care.

Most insurance policies are comprehensive, and so give room for benefits to be utilised in a variety of settings. However, it is important to be sure of which facilities are specifically covered.

The insurance provider may not grant benefit payments if your loved one is in a wrong type of facility that is not covered by the insurance policy.

Some insurance policies only cover for some state-licensed facilities, or provide cover only for nursing home care, but a lot also cover for assisted living facilities, and this is vital, as this type of care is expanding rapidly.

Many policies cover in-home care as well, including nursing care, physical therapy & medical equipment. Community care may be covered, and this usually entails adult day care and respite care for the caregiver. Respite care usually provides Caregivers compensation for up to 14 to 21 days a year. This care can be received at home, at a nursing home, or an adult daytime care facility.

Some (not all) policies may also go as far as paying benefits to the family members who provide care, or cover modifications in the home, like the addition of wheelchair ramps, or installation of safety devices.

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CAN I USE LONG TERM CARE INSURANCE TO PAY FOR HOME CARE?

A long term care insurance policy will reimburse the policyholder a pre-chosen daily amount in order to cover the expenses of skilled nursing care.

These include costs for the following :

• At-home care
• Adult day care
• Assisted living facilities (resident care or alternative care)
• Nursing home care

At-home, long-term care may provide coverage for the cost of the following:

• Professional nursing care
• Occupational therapy
• Speech therapy
• Physical therapy
• Rehabilitation therapy

And/or services that are used in assisting them with the activities of daily living (ADLs) which include the following:

• Ambulating (walking or getting around)
• Bathing
• Dressing and grooming
• Feeding
• Using the toilet
• Continence management
• Transferring (getting in & out of a chair, or bed)

In addition, long-term care coverage can provide cover for short-term hospice care for terminally ill individuals. The aim of hospice care is to help with management of pain and to provide physical and emotional support for all the parties involved.

Most insurance policies will allow the beneficiaries to receive care at a nursing home, a hospice facility, or in the comfort of their own homes. Most hospice care however, are not considered to be long-term care, and so may obtain coverage via Medicare.

WHAT LONG-TERM CARE WILL NOT COVER

Individuals who already have a pre-existing medical condition, may not qualify for long-term care during the period of exclusion. This exclusion period could last up to several months after the first initial purchase of the insurance policy.

Also, the insurance policy may typically not cover for in-home care services provided by family members, although there may be exceptions.

Note also, that long-term care coverage will not be provided for costs of medical care, as many of these will be placed under coverage of Medicare if you’re eligible.

CONCLUSION

As you continue to age and about to reach your senior years, purchasing long term care insurance now can have some form of benefits. It is most likely that someone who waits too long to buy long term care insurance has a greater chance of developing a health condition in the future.

This could affect the status of the application and might keep him or her from being approved for coverage when its greatly needed. In other words, putting a policy in place can ease your worries and might mean you have more options later in life, when you’re at your most vulnerable.

While long term care insurance may have its pros and cons, when you plan it right however, it could be just what you or your loved one requires later in life.