Costs, Coverage, and Care FAQs
Long Term Care and LTC Insurance is getting more attention due to longer life expectancy, changing family dynamics, and lack of government resources contributing to a critical need for planning.
Why will most of us need long term care?
We are living longer lives! The economics of aging have changed dramatically because of life expectancies given medical advances and healthier lifestyles. Gains in mortality have resulted in morbidity concerns –which means that chronic conditions of aging require assistance.
Why is LTC Insurance more important for women?
Women are more vulnerable to LTC needs. They live longer than men; are more likely to be living alone; and have a greater chance of developing Alzheimer’s and other chronic conditions.
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. The cost of long term care is also 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.
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.
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 without having a dedicated LTC Insurance plan will likely mean you will have to reallocate income or sell assets. That could mean tax consequences, lost income, and an opportunity cost. This can adversely affect your ability to keep financial commitments and significantly comprise you 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.
Why is the LTC Insurance More Efficient Than Self –Funding ?
Long term care insurance provides a TAX FREE income by way of a daily or monthly benefit.
Why is it Inefficient to Self Fund for Long Term Care Needs?
Self-funding may actually increase the cost of care. Liquidating assets will trigger income taxes. Moreover, by self-funding, you forfeit the opportunity for future appreciation. The cost to self- fund is significantly more expensive given taxes and opportunity cost for every dollars worth of care.
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.
Is Long Term Care covered by Medicaid?
Medicaid is a Federal and State program that pays for a number of services including home care and assisted living in very limited situations. Medicaid is now a “managed” plan and has stricter benefit triggers and fewer care options compared to LTC Insurance. To qualify, individuals must have minimal income and assets, income generally no more than $2,300 per month and no more than $2,000 in assets (not including a house.) Medicaid is also not free – income can quickly be lost and transferring assets can create tax liability issues.
If you are able to qualify for Medicaid, the options provided are limited. If you are seeking home care, very few assisted living programs accept Medicaid and they are all “enrollment capped,” which often leads to long waitlists. The primary place Medicaid pays for is nursing homes.
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.”