What is long-term care?

 

Long-term care (LTC) is the assistance that is provided to people who are unable to perform the Activities of Daily Living (ADL’s) that healthy, fully-functional people do independently and on a daily basis.

 

Although most people think that long-term care applies only to nursing homes, people can receive long-term care services in a nursing home, their own home, or in an assisted living facility. Most of the cost of long-term care will be paid for by the person or their family.

 

To determine your need for long-term care, go to http://www.medicare.gov and click on Long-term Care. One of the choices there will be A Long-term Care Planning Tool. This questionnaire will take about 5 minutes to complete.

 

Who pays for long-term care?

 

Medicare does not pay for long-term care. Medicare pays for medically necessary inpatient hospital care for the first 60 days minus a deductible for each benefit period. Coverage includes a semiprivate room, all meals, special and intensive care units, coronary care units, regular nursing services, and drugs while in the hospital.

 

Hospital insurance will also pay for up to 100 days in a skilled nursing facility. The first 20 days are fully covered, but for days 21 through 100, a daily copayment is required. The patient must have been hospitalized first for at least 3 days and then admitted to a nursing facility within 30 days after leaving the hospital in order to qualify.

 

As explained on the web site, Medicare does not cover:

Long-term nursing home or custodial care, such as assisted living.

Routine physicals.

Dental services and dentures.

Prescription drugs, except for hospital patients.

Eye exams and glasses.

Hearing tests and hearing aids.

Cost of a physician above Medicare’s approved dollar amount.

Private duty nursing.

 

How much does it cost for long-term care?

 

Perhaps the best way to determine the cost of long-term care is to call your local facilities and ask about costs. While you are doing this, you can also learn about the types of care that are available in your community. Make a chart and compare the services.

 

Another source of information could be your area council on aging. This site will take you to a list of all Area Councils of Aging by states.  http://www.aoa.gov/eldfam/How_To_Find/Agencies/Agencies.asp Call or visit your local office on aging and learn what services they offer.

 

What should be included in a long-term care insurance policy?

 

The National Association of Insurance Commissioners http://www.naic.org recommends that a long-term care insurance policy should include:

1. Coverage for Alzheimer’s or a similar disease after the policy is purchased.
2. Everyday functions and/or assisted living.
3. Home health care coverage.
4. The shortest elimination period that you can afford (this is the period before the insurance company starts paying benefits).
5. The length of benefits that you can afford. For example, coverage for 5 years will cost more than coverage for 3 years.
6. An adjustment for inflation.
7. That the premiums will be waived when you begin to use the policy.
8. An upgrade if the insurance company markets a better policy in the future than the policy which you purchased.
9. A review of your health before the insurance company issues the policy.
10. Be able to cancel the policy within the first 30 days if you decide the policy is not appropriate.

Also, buy a policy from a company that is rated A or A+ by A.M. Best or that is rated AA by Standard & Poor’s. These ratings are available at A.M. Best at 908-439-2200 or http://www.ambest.com or Standard & Poor’s Insurance Rating Service at 212-438-2400 or by email at ratings_request@standardandpoors.com

 

The National Association of Insurance Commissioners (NAIC) also suggests that consumers should check with their tax advisor about the possibility of deducting a portion of the premium paid for long-term care insurance.

 

What are some additional suggestions about purchasing long-term care insurance?

 

Consumer Reports has conducted extensive research on long-term care insurance. Their web site is very helpful. http://www.consumerreports.org Go to the section on Personal Finance on the Consumer Reports web site and look for Insurance and then for Long-term Care Insurance.

 

In an article published in November 2003, Consumer Reports suggests that you should NOT purchase long-term care insurance if these conditions apply:

Skip a plan if:  You will be able to afford to pay for your own care.
OR You can’t afford the premiums for the necessary coverage,

OR You don’t anticipate having enough money to cover sharp premium hikes that may take place during the years you own the policy.

However, Consumer Reports suggests that you should consider long-term care insurance if these conditions apply:

Consider a plan if:  By around age 55, you have a chronic medical condition that you and your doctor believe could eventually require nursing home care or if you have a family history of a debilitating disease.

And if you have no willing or available family member to help care for you.

 

What are other resources would be helpful?

This site was developed by a Cooperative Extension Specialist at the University of Minnesota.  The materials are especially suited for making decisions about long-term care. The site is:  http://www.financinglongtermcare.umn.edu/

 

The National Association for Insurance Commissioners offers one free copy of their Consumer Guides about insurance products. Call 816-783-8300 or order online at http://www.naic.org/consumer_home.htm Additional copies may be obtained but there is a charge.

 

Check list for deciding about the purchase of long-term care insurance:

 

ü      I have considered the likelihood of needing long-term care

ü      I have evaluated the cost of long-term care in my community

ü      I have considered whether I will be able to pay for long-term care, if needed

ü      I have considered whether I will be able to afford the premiums for long-term care insurance now and in the future

ü      I have considered what other alternatives are available in terms of receiving care, if needed, and for financing long-term care

ü      I have evaluated the ratings of the insurance companies that offer long-term care insurance