ANSWERED…Your Top 10 Questions About Long-Term Care (Part 1 of 2)
1) What exactly is long-term care?
Long-term care is a general term for services needed to help with doing everyday activities. Even though LTC can include medical treatment, most of it has to do with helping you with Activities of Daily Living, or ADLs. The six major ADLs are:
2) What are the different types of long-term care?
Long-term care is mostly provided informally by a family member or friend, or formally at a care facility. You can even get care in your own home by a professional caretaker, which might include nursing and therapy.
Informal long-term care is usually provided by family members and friends and these people are typically not paid for their exhausting services. Amazingly, about 90% of all in-home care is provided by loved ones, usually a spouse.
When considering a married couple, typically the husband is older and usually needs care first. His wife will probably be his caretaker. If he passes away first, usually the widow’s daughter will take care of her but this arrangement causes hardship for both mother and daughter since the daughter likely has her own family and career. Friction between siblings can flare up also because of this situation.
Businesses that provide LTC services help people on a part-time, periodic, or around-the-clock basis. Services can include health and personal care, help with meals, laundry and housekeeping. Places that provide LTC may be called different things like nursing home, personal care facility, residential care facility, etc.
3) What is the best age to start long-term care planning?
Since the costs are so enormous for care, you want to start planning on saving specifically for costs in your early to mid 40s.
If you’ll be buying an insurance policy, it’s a good idea to buy one between the ages of 50 and 64. Once you reach Medicare age and start visiting the doctor more often, chances increase that your doctor will find something and that might interfere with qualifying for LTC insurance.
If there’s a family history of MS, Parkinson’s or Alzheimer’s, it’s best to start planning for long-term care as soon as possible.
4) How much LTC insurance should you buy?
Having at least three years of coverage in a nursing home with a private room is a very good start and for those of you in the public sector, keep in mind that your pension can be used to offset LTC costs as well, so you won’t need anywhere near the most expensive type of insurance.
5) When does an LTC policy pay out benefits?
Most insurance companies will start paying for the cost of your care (partially or totally) only after it’s been determined that you are chronically ill and the elimination period (discussed below) has passed. In most cases, to be certified as chronically ill, you either need regular supervision because of a disease such as Alzheimer’s or be unable to perform at least two of the activities of daily living (ADLs).
Most people that buy an LTC insurance policy have to satisfy an elimination period, which is kind of like your car or health insurance deductible. Before an LTC policy starts paying out benefits, you have to satisfy an elimination period, which is the number of days you have to be getting care, either at home, a nursing home, adult daycare, or other type of facility.
Who foots the bill during the elimination period? You do!
Since part of the price of LTC insurance premiums depends on the elimination period, you have to think really hard about how much long-term care expenses you want to pay out of your own pocket. If the elimination period that you’ve selected is 90 days, and the average cost of nursing home care in your area is $6,000 a month, then you have to pay the home $18,000 before you see one cent from the insurance company. So, when it comes to your overall long-term care action plan, think very carefully about what you’re willing to pay out of your 457 plan, savings, or other types of accounts.
Generally speaking, when it comes to your LTC insurance premiums and the elimination period, the longer you have to wait until your benefits start, the lower your premiums are. The opposite is also true, so if you pick a short elimination period, say a month or so, then it’s safe to say you’ll be paying higher monthly or annual premiums. Keep this one thing in mind though…a longer elimination period means a smaller chance that you will collect benefits because you might only need care for a few months, so again consider your elimination period very carefully.
If you’ve been treated for a condition (usually within 6 months of buying your policy), then the insurance company might impose a separate elimination period specific to your pre-existing condition. What this means is if you need care for the condition you were recently treated for, then the insurance company can hold off paying you benefits for some amount of time, which is usually 6 months. The length of time depends on the policy, which is based on the maximum time according to your state’s insurance rules.
Insurance companies will also not pay benefits if you already have a mental disorder (expect for diseases like Alzheimer’s) or have hurt yourself trying to commit suicide. Care needed to treat conditions brought on by alcohol and/or drug abuse won’t be covered.
If you fear the high costs of long-term care, contact Public Retirement Planners, LLC to see what options you have to offset this huge risk.