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What is long term care?
Long-term care includes a wide variety of services for people
in need of ongoing assistance. The services include rehabilitative, nursing, and
social care mainly for elderly people, however, often young people require these
services as well.
The most common services that long-term care provides are those
that help people with activities of daily living. These activities include bathing,
dressing, eating, and assistance in taking medicine. Long-term care facilities
provide skilled nursing and rehabilitative care when so ordered by a physician
and are supervised by skilled medical personnel consisting of licensed nurses
and therapists.
What Does it Cost?
As with most services, the costs of Long-term care can vary.
Costs depend on the level of attention needed, the services provided, and geographic
location. Due to the different levels of care provided by each individual type
of facility costs are rarely comparable.
In the United States the average cost for twenty-four hour
a day care in a nursing facility is over $100.
Depending on the type of assisted living facility and the geographic
location of an individual, costs can range anywhere from $1,000 to $8,000 per
month.
In home care is also quite expensive. The current rate for
a visit by a registered nurse (RN) is approximately $100. These visits can run
between two and four hours a day.
When is the Best Time to Purchase Long Term Care Insurance?
As a general rule, since the premiums are determined by age
the younger you are the cheaper the premiums will typically be. The premiums on
most policies will stay at the same level throughout your life.
What do You Look for In a Policy?
There are several factors that should be considered when deciding
which Long-term care policy to purchase. The factors are made up of your personal
financial situation, your preferences regarding long term care choices, the amount
of risk you are willing to accept to your own assets, and your family arrangement.
As with most types of insurance there is not one best company or policy. You must
compare all of your options and select the policy that best suites your needs
financially and provides the services that you are looking for.
How do You Select a Good Company?
One of the most important factors in selecting an insurance
company is to check with your local insurance department and find out if the company
you want to use has a good financial rating as well as if they have any complaints
against them to the state insurance bureau.
How Much Insurance Coverage Do You Need?
Most Long Term Care Insurance Policies pay a specific fixed
amount of money for each day that you receive covered services. The amount of
benefit paid on a daily basis is determined by you when you purchase a policy.
Always remember that no policy will cover all the costs of long term care without
a specified limit of coverage.
There are four major aspects of a Long Term Care policy that
you should evaluate when deciding how much Long Term Care Insurance to buy. These are:
- The amount of benefit
- Is there an inflation adjustment made?
- The period of benefits
- What the deductible period is?
The benefit paid is the maximum dollar amount that a policy
will provides each day that coverage is needed. The general range of benefits
that are available to consumers fall between $40 and $200 per day for nursing
facility coverage. Most policies pay about half of the cost for nursing care or
regular facility care, though some do allow you to upgrade this amount for additional
premium. When determining the amount of coverage you require per day you should
take into account the amount of money you are willing to spend from your own assets
everyday. People who are married or have a significant other usually need to retain
all of their income for the other person. These are the people who should have
the most daily coverage. The difference between the cost of a good nursing home
and the portion of income that will be used towards the cost of a nursing home
will equal the amount of benefit you should purchase.
In order to compensate for the rising costs of nursing home
facilities over time, a policy with an inflation adjustment should be purchased.
These policies usually increase coverage by about 5% annually. There are two types
of inflation adjustment policies that are available to the consumer. The first
policy just raises its benefit a certain percentage annually from its original
coverage amount, while the second is compounded annually. While the difference
in the amount of coverage is pretty small in the short run, in the long haul it
can amount to a pretty hefty sum.
There are several ways to limit the cost of the inflation adjustment
benefit. One of these ways is to is to purchase a policy that stops adjusting
after a certain number of years. Another method is to find a policy that stops
adjusting when you reach a certain age or benefit amount.
The amount of time your policy will be needed to pay for care
is call your benefit period. Policies have benefit periods that range from two
years to an unlimited time period. Most people (92%) spend less than five years
in a nursing facility so a benefit period of two years is typically more than adequate.
The amount of time that you are required to pay for your covered
services before your insurance policy will start to pay is known as your deductible
period. This period usually ranges from 20 days to 100 days. The shorter your
deductible period is, the higher your premiums will be. You need to find the middle
ground that is right for you. This depends on the assets that you have available
to pay for services and how much you can afford to pay in premiums.
What Services Are Covered By Long Term Care Insurance?
A good Long Term Care policy will cover all possible levels
of care in any different setting in which care is available. The most important
services that your policy should cover is custodial or personal care. Many policies
differentiate the amount of coverage between nursing facility care and in home
care. Usually in home care is covered for half the daily benefit of nursing facility
care. Most policies do offer equal amounts of coverage for both for an additional
premium.
What Services Are NOT Covered By Long Term Care Insurance?
As with most insurance policies, there are some exclusions
to its coverage. A policy with no exclusions would be priced out of most consumers
range. Some conditions that are not covered are:
- Pre-existing Health Problems that you had prior to purchasing the policy
- Drug and Alcohol addiction
- Attempted suicide
- Illnesses caused by an act of war
- Mental and nervous disorders or diseases (Alzheimer's disease and related
dementia are covered)
- Treatment already paid for by the government
Does The Cost Of Your Long Term Care Policy Remain The Same?
Most premiums for Long Term Health Care remain level for the
term of the policy. This means that the premiums do not automatically go up as
your health decreases or you get older. The company can raise premiums for a whole
class of individuals in your state, with specific permission from your states
insurance commission.
Can My Policy Ever Be Canceled?
A guaranteed renewable policy is the best type of policy to
purchase. This means that the insurance company cannot cancel the policy for any
reason other than non-payment of premium. Most companies selling this policy clearly
state that the policy is guaranteed renewable.
An exception for the cancellation of an insurance policy is
non-payment due to a covered condition such as Alzheimer's. Some companies will
even ask you for a third party to notify in case of non-payment of premium.
What Type of Health Do I Need To Be In Prior To Purchasing A Long Term Care Insurance Policy?
Most insurance companies will ask you questions concerning
your health prior to selling you an insurance policy. A general rule of thumb
is the more questions that an insurance company asks you now, the fewer problems
you are likely to run into in the future when you are trying to collect a claim.
The insurance company may contact your doctor or even health insurance company
concerning your prior health. Insurance underwriting is often not as clear as
1+1=2, so feel free to question a company that has turned you down for coverage.
Some companies require a waiting period for any pre-existing
conditions. However, you should always fully disclose all of your medical conditions
in order to prevent trouble later on. For people over the age of 80, some companies
will only sell limited policies or will not sell policies at all to these people.
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