Former First Lady Rosalynn Carter once said: "There are only four
kinds of people in this world; those who have been caregivers; those
who currently are caregivers; those who will be caregivers; and
those who will need caregivers."
As more and more baby boomers move into middle age — and their
parents get older, too —we will see eldercare become the focus of
the next few decades. However, most of us will not pay close
attention to Carter’s words. The reality is that our lives can be
turned upside down when a parent or loved one needs care. How often
do you think about yourself needing some form of long-term care? The
cost of providing long-term care is high — emotionally, physically
and financially.
When people consider the subject of long-term care, they often think
about nursing homes. In reality, long-term care has little to do
with nursing homes. Understanding the difference can help protect
your family and finances.
Long-term care is a continuum of care services you will need when
you live a long life. In fact, the longer you live, the more likely
you are to need some form of long-term care. Long-term care is
usually custodial care. Long-term care is defined as needing
assistance with your activities of daily living, such as toileting,
bathing, dressing, eating, transferring and continence. By
definition, it includes cognitive impairment so severe that the
individual needs constant supervision. Long-term care can take place
in the home, in an assisted living facility, adult day-care, and/or
in a nursing home.
If you or a loved one requires custodial care, chances are it will
be delivered in the community and not in a nursing home. Many
studies conducted find that care is overwhelmingly provided at home.
The key question is, of course, who is going to pay for it?
Many people think and believe that government is going to pay for
their long-term care needs. It is true that, not too long ago,
Medicare did pay for home health care on a regular basis. Also, it
was easy to divest assets and have Medicaid pay for nursing home
care. Today, Medicare pays less and less for home health care. All
states are evaluating their Medicaid rules and making it more
difficult for people who could pay for some of their nursing home
care to divest their assets.
About 25 percent of all long-term care costs are paid out-of-pocket
by individuals and their families. Only about 14 percent are paid by
Medicare, with Medicaid picking up most of the balance of the bill.
Why is the government re-evaluating its spending for long-term
health care needs? Because it simply cannot continue to sustain the
monetary outlay to pay for the rapidly increasing number of people
who will need this kind of care.
How is one able to pay for long-term care needs? Long-term care
insurance (LTCI) is an option that many people are considering
today. Approximately 100 companies offer LTCI. When you are thinking
about buying LTCI, it is important to understand what you want and
need. There are many options to consider in terms of the benefits
you would want LTCI to cover.
First, long-term care insurance policies can be either non-tax
qualified or tax qualified. Tax qualified policies came into
existence in 1997. These policies are highly regulated by the
insurance commissioner in each state, which provides added
protection for consumers.
Next, consideration must be given as to if you would prefer a
monthly benefit or a daily benefit. Monthly benefit periods are more
flexible, but a little more expensive. The cost can fluctuate
greatly when selecting this benefit option. The elimination period
can vary from zero to 365 days. Essentially, during the elimination
period the individual is self-insuring. You need to consider whether
or not inflation protection is needed.
Then, multiple premium payment options are offered. Premiums are
calculated based on your age and health status, along with the type
of premium you choose. When purchasing LTCI, it is important to
remember to deal with companies that have very high industry
ratings. Also, consumers should be sure the companies with whom they
choose to work have billions of dollars in assets, so when a claim
is made, it will be paid.
LTCI policies have many variables. One company may pay for a family
member to be trained to care for the person needing assistance,
while another company may not. Some companies offer international
coverage. Many companies offer riders on their policies. These are
benefits you can purchase for additional premium dollars.
It is very important for the consumer to understand what parameters
must be met in order to access these benefits. The information
contained in this article should serve only as a brief introduction
to a highly complex type of insurance, but a very important one.
Remember, the primary reason people purchase LTCI policies is to
maintain choices and independence.
