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What Is Long-term Care and Who Needs It?

Long-term care (LTC) refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period of time. Whether you need LTC insurance depends on your age, health status, overall retirement goals, income and assets.

Purchasing a policy at a younger age typically means premiums are much more affordable. This often evens out the cost of coverage over the life of the policy, as compared to a policy taken out over the age of 65. While you may pay for a longer period of time, taking out a policy around age 50 allows you to enjoy peace of mind from knowing that you are covered.

What Is the Cost of Long-term Care?

According to the Genworth Market Survey of Nursing Home and Assisted Living Costs, long-term care can be costly. In 2015, the average private-pay cost of care per year in a nursing home was $91,250 for a private room and $80,300 for a shared room. Assisted living rates also averaged $43,200 per year. Rates vary, depending on region, size of the accommodations, services available, quality of care and amenities.

How Does LTC Insurance Differ From Disability Insurance?

Although long-term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long-term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury and does not cover care. The policyholder will then have to pay out of pocket for any ongoing long-term care due to his or her accident or injury.

In addition, Medicare should not be considered a resource for handling any substantial long-term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days.

 Typical Coverage Inclusions

A long-term care insurance policy covers some or all of the following types of services:

  •  Nursing home coverage
  •  Assisted living facility coverage
  •  Adult day care center coverage
  •  Home health care coverage
  •  Personal care coverage

Most policies pay a daily maximum benefit and a lifetime maximum benefit. Actual benefits are chosen at the time the policy is purchased. The daily maximum benefit for most long-term care insurance policies is usually less than the cost of one average day of long-term care service.

Helping You Offset the Cost of Extended Care

When it comes to your health, you should take every care and precaution. Fortunately, most Americans are living longer and healthier lives thanks to advances in medicine and preventive care. While that is welcome news, it also means there is an increased risk of living with a chronic health condition that will require extended care. With the average private-pay nursing home stay costing more than $80,000, a long-term care insurance policy allows you to offset the high cost of extended care due to accidents, illnesses or advanced age while protecting your personal assets.

Long-term care insurance protects individuals against incurring large out-of-pocket expenses should they need help performing the activities of daily living due to an accident, illness or injury. With affordable premiums, individual policies are ideal for those who want an increased level of financial protection.

Posted 8:00 AM

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