What is Long-Term Care?
Long term care refers to assistance with the very basic, everyday activities that most of us can do for ourselves. We call them ADLs or Activities of Daily Living. As a result of illness, injury or advanced age, many people need assistance in order to eat or dress or bathe. The need for long term care may also result because a person has cognitive impairment. Some people need supervision or reminders to accomplish every day activities, such as using the toilet, eating, bathing, dressing, and so forth.
What is Long-Term Care Insurance?
Long-term care is provided to people who are unable to perform the basic tasks of everyday living on their own for an extended period due to chronic medical, physical or cognitive conditions, or disabling injuries. Long-Term Care Insurance covers long-term care services provided in a nursing home, at home, in an assisted living facility, or in other community-based settings. Medicare, Medicare supplemental insurance (Medigap), and traditional health and disability insurance plans typically do not cover long-term care services.
What is the Average Cost of Long-Term Care?
Today, the average cost of staying in a nursing home can be very expensive, often over $90,000 a year. Home care can be very expensive as well. Few people can afford this cost without using their life savings. Long-Term Care Insurance allows you to protect your assets in the event you need long-term care sometime in the future, just like you protect yourself with homeowner and auto insurance.
How Much Does Long-Term Care Insurance Cost?
Long-Term Care Insurance premiums are determined by many factors. Factors include: age, health, benefit and optional riders selected. The premiums charged for tax-qualified Long-Term Care Insurance Policies are treated as medical expenses under Federal tax law which may also qualify you for a more favorable outcome on your tax return. You should check with the insurance carrier to determine if your plan is tax-qualified and consult with an attorney, accountant or tax advisor regarding the tax implications of purchasing a tax-qualified policy.
Who Pays for Long-Term Care?
About half of all long term care expense is paid by state Medicaid programs. About one-third is paid out of pocket by individuals and their families. Medicare only provides for some skilled care in some limited situations. Neither Medicare supplemental insurance nor major medical coverage provided by most companies pays for long term care. This leaves approximately one sixth of the total cost to be covered by other government programs and private insurance.
Does Medicaid Pay for Long-Term Care?
Yes, but in very limited situations. Medicaid will generally apply only to those with very low incomes and very few assets. Even then, there is only limited choice of what and where benefits will be provided. For example, there might be limited choice of physician and facility, no control over the number of people sharing a room, or no ability for the family to pay for any extras.
Does Medical Insurance Pay for Long-Term Care?
Although medical insurance has some aspects of long term care, they are not the same thing. For example, some medical plans may pay for the services of a nurse while you are recovering from an illness or an injury that requires medical attention. This medical benefit is very limited. Once you are better or reach the maximum benefit for nursing services, this benefit would cease to be available. Medical insurance is not designed to cover activities of daily living. Long term care insurance is designed to cover activities of daily living.