Costs, Coverage, and Care FAQs

The subject of Long Term Care and LTC Insurance is getting more attention with the critical need for planning due to longer life expectancy, changing family dynamics, and lack of government resources.

Why is planning for long term care important?
Long term care is the largest unfunded risk to a client’s nest egg, retirement, and independence. Therefore, it is extremely important for people to plan for long term care while they are healthy and insurable.


What is the average cost of long term care today?
Currently, the average cost of care is $75,000 – $100,000 per year per person.


On average, how long is care needed?
The average period long term care is needed is three years. The current average rate of $100,000 per year per person, equals $300,000 in today’s dollars.


Are long term care costs rising?
Yes. The cost of long term care is increasing at 3%-5% per year. In 15 years, the cost of care will double to $600,000 per person. In 30 years, the cost will be $1.2 million per person or $2.4 million per couple.


How do these costs impact me and my family?
Without a Long Term Care Insurance plan, the cost of long term care puts your income stream and your retirement savings at risk. Paying for care in the absense of having a dedicated LTC Insurance plan will likely mean you will have to reallocate income or sell assets. There will likely be tax consequences, lost income, and an opportunity cost. This can adversely affect your ability to keep financial commitments and significantly comprise your and your family’s lifestyle. Moreover, the financial and emotional consequence of long term care causes a host of issues with blended families and adult children and strains family dynamics for those who have not planned.


Is Long Term Care covered by Medicare?
Medicare does not pay for most long term care services. Therefore, individuals should not rely on Medicare to meet their long term care needs. Medicare can pay for up to 90-100 days of skilled nursing care at varying levels. Medicare does not cover custodial care when that is the only kind of care needed. Should skilled healthcare be needed in your home for the treatment of an illness or injury, Medicare may pay for some part-time or intermittent home health services furnished by a home health agency.

An individual must be 65 years of age to be eligible for Medicare unless disabled. Medicare Part A (hospital insurance) helps pay for inpatient hospital care, hospice care, and skilled home-health services for home-bound patients. It also may help cover short-term inpatient care in Medicare-certified, skilled nursing facilities, but only if the individual is there for rehabilitation, not long term or custodial care.

For more information on what is and what is not covered by Medicare, visit www.medicare.gov and www.cms.gov.


Do Medicare supplemental insurance plans provide long term care coverage?
These supplemental plans are designed to fill in some of the gaps in Medicare coverage, but they do not cover most long term care services. They “mirror” only what Medicare pays for.


Do private or employer health insurance plans pay for long term care services?
Private or employer-provided health insurance mainly covers costs of care for acute conditions, but does not cover long term care. Long Term Care Insurance “picks up” where medical insurance “leaves off.”


Does Medicaid provide coverage for long term care services?
For those who are impoverished and meet specified income and asset criteria, managed Medicaid may cover long term care services. Medicaid is now a “managed” plan and has stricter benefit triggers and fewer care options compared to LTC Insurance. Medicaid will not be a robust option in the coming years. Medicaid is for those who cannot health qualify or cannot afford private insurance for those in “crisis mode.”


2015 MEDICAID LIMITATIONS

Medicaid Limitations Mean a Loss of Income, Assets,
Independence, and Control

Current look-back period = 5 years;
Unlimited Penalty Period

  • Cash and Assets – These levels are far lower if Medicaid services are given for home care.
  • Community Spouse asked to contribute 25% of any income that exceeds these amounts.
Medicaid Figures 2015
Income Level For One Person $825/mo
Income Level For Two People $1,209/mo
Resource Level For One-Person Household $14,850
Resource Level For Household of Two People $21,750
Minimum Monthly Maintenance Needs Allowance $2,980
Maximum Community Spouse Resource Allowance $119,220
Personal Needs Allowances $50/month
To learn about the Long Term Care Insurance plan that is best for you, your loved ones, or your employees, contact us at 516.801.1419 or info@KarpLoshak.com.