Long Term Care Insurance

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What is long term care?

Long term care insurance provides for the medical and/or personal care services required by a person
with a chronic disability or illness. The Health Insurance
Association of America estimated in 1998 that at least 40%
of the population over age 65 would enter a nursing home
before they die. Half of those requiring care are released
within six months. Of those remaining, the average stay is
2 ½ years.

The average cost is about $41,000 a year.
By the year 2030, the average annual cost of a nursing home
stay is expected to increase care due to accidents, cancer,
strokes, etc. Approximately 7 million men and women were
living in nursing homes in 1997, and some stays have exceeded
20 years.

Who pays the cost of long term care?

The
patient or family pays for nursing home care costs not paid
by Medical or Medicaid. Only about 8% of nursing home costs
are paid by Medicare, which offers limited coverage for the
first 100 days in a skilled care facility, and no coverage
for the intermediate or custodial care that the vast majority
of nursing home residents require. In 1997, Medicaid paid
more than 50% of the total nursing home bills.

To qualify
for Medicaid the patient must be impoverished under the state’s
definition. In most states the patient must not have income
greater than the cost of the nursing home facility. Other
states have “income caps” to limit eligibility
for Medicaid, for example, “income cannot exceed 3 times
the Federal Social Security Income benefit level for that
year.” For the most part, the people who need the care,
or their families, pay the bill. The most intelligent method
to cover Long Term Care is Insurance. This may protect assets
from confiscation by the State pay for care.

The need required for long term care.

Some people
may require daily medical attention while others may simply
need help with the basic activities of daily living (ADL)
such as bathing, dressing, taking medication, eating, using
the toilet, getting in or out of bed, or walking. A typical
nursing home stay commonly falls into 2 categories: short
term stays (1-3 months), which involve skilled nursing care,
and typically follow a hospital confinement; and lengthy
stays that comprise mostly maintenance and custodial care
and that average 2.5 years.

Levels of Care

  • Skilled Care: Refers to
    a patient who needs daily nursing care, physical therapy,
    etc., provided or supervised by professional nurses and/or
    therapist under physician’s orders. Intermediate care.
    Patient requires only intermittent or occasional rehabilitative
    care or nursing.
  • Custodial care: Patient
    needs help with activities of daily living (ADL). Does
    not require a registered nurse or a therapist, but need
    for such care is based on physician’s orders.
  • Long-Term
    Care Insurance
    : Policy
    may be issued on an individual or a group basis. The Health
    Insurance Association of America has prepared a list of “typical
    coverage” offered by leading sellers of Long-Term
    Care insurance. 1

Long term care insurance may provide for:

  • Services
    covered. Skilled, intermediate and custodial care, home
    health care, adult day care (often covered in the policy)
  • Daily
    benefit: $40-300/day nursing home. $40-300/day home health
    care
  • Benefit
    eligibility: Physician certifies that benefit is medically
    necessary
  • Benefit
    period: 2 years, 3 years, 5 years or life
  • Alzheimer
    coverage: Yes (If not preexisting condition)
  • Deductible
    periods: 0-180
  • Renewability:
    Guaranteed
  • Pre-existing
    condition: 6 months
  • Inflation
    consideration: Yes (often 5% annual increase in daily benefit
    amount)
  • Age
    limits for issuance : 50-84
  • Waiver
    of premium: Yes
  • Free
    look: 30 days

1Note: Of course,
the more benefits included in the policy, the larger the
premium. Since every policy may be different, the terms,
conditions and limitations of the policy must be carefully
reviewed before making a purchase

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