Long Term Care insurance is rising in popularity. Following is a definition of this insurance, including the general types available. Services provided are discussed. The advantages to having this coverage, and the best time to purchase a policy, will also be explained.
This coverage helps cover the expense of care for an extended period. The beneficiary can be virtually any age, and does not have to be “sick” in the clinical sense. This is simply someone who cannot carry out at least two necessary daily activities. These may include eating, dressing, toileting, bathing and walking. The services provided are not made available by Medicare or Medicaid.
Two basic kinds of insurance exist. A “tax-qualified” plan is most pervasive. This is more popular because premiums are tax-deductible. The main qualification is that the insured must not be able to perform two or more basic functions. A “non tax-qualified” plan is a policy that requires the recipient to be incapable of performing only one basic activity each day, but premiums cannot be deducted in taxes. Tax laws are complicated, so it is advisable to seek professional advice when choosing plans. Employer group insurance is available, but may not be tax-qualified.
Services included in this coverage are home care, adult day care, hospice, Alzheimer’s facilities, and assisted living. These plans also pay the expense of a live-in nurse or companion. Most expenses are reimbursed to the insured. Rates are generally determined by age and health status of the beneficiary at the time the insurance is purchased, the length of the waiting period before plan benefits begin, and any protection against future inflation.
These policies are beneficial because they pay where medicare and medicaid do not. Medicare provides only some home care and short term stays in nursing facilities, and nothing for long term care. Medicaid covers some home health care costs and most nursing home costs, but one must deplete most assets before becoming eligible. Medicaid covers some care in assisted living facilities, but most costs must be paid through private funds. Home health aides costs approximately $29 per hour, and assisted living facilities usually cost around $100 per day.
If an insured’s net worth, excluding housing, is between $200,000 and $2 million, then getting this insurance is recommended. Financial advisers recommend that individuals purchase the insurance when in their fifties, not before or not later. If premiums are paid for too long before services are needed, the cost may exceed the benefit. If people wait too long to purchase long term care coverage, premiums may be too costly.
People are living longer, but because of this, usually end up needing assistance later in life. Therefore, Long Term Care insurance should be addressed as part of retirement planning. While premiums can be expensive, they can be less costly than actual health and long term care costs. Those who purchase these policies feel assured that they will be cared for, and their personal assets protected.
For more information on how Long Term Care Insurance can help prepare us as we age. Also you can get a long term care insurance quote. We represent 20 of the top LTCi providers. This gives you tremendous options.