A Look at Long Term Care Insurance | brokeGIRLrich
What is long term care insurance? It’s one of the best gifts you can give your kids.
Long term care insurance is used in the event of a prolonged illness that requires constant care. It covers nursing home stays for extended periods of time, and that’s the primary context we’ll discuss here, but it covers care for anyone with a lifelong disability or injury requiring constant care as well.
Your regular health insurance may have a provision that covers a nursing home stay, but it’s for a limited time. Medicare does have this provision, but it also only covers a limited amount of time. If you get a disease like Alzheimer’s or cancer and wind up needing months or years of care in a full time facility, your insurance will probably run out and you’ll need to pay out of pocket.
Oftentimes these facilities are often really expensive and can quickly drain any retiree’s savings. Many wind up giving up their home to the nursing facility in exchange for care. Long term care insurance can help prevent this.
Long term care insurance can cover needs like:
- •Assisted Living Facilities
- •Nursing Homes
- •At-Home Care
- •Adult Day Care
- •Care Coordination
- •Necessary Home Modifications
Like any other kind of insurance, long term care insurance is cheapest if you invest in it well before you need it. At 50, you may think long term care is far off, or that you won’t even need it at all, but buying insurance then lowers the premium considerably rather than waiting until you’re 70, even if you’re still in good shape at 70.
If you think family or friends will assist you should anything happen as you age, that’s a discussion you need to have with them sooner rather than later. I don’t think its unfair or unreasonable to request assistance from your children, but you want to have a very frank conversation about how far that care will go.
Do they live nearby? Would one be able to take you to the doctor’s weekly for treatments, if necessary? Do any have room in their house to take you in? Would one move back home and take care of you? Will they care for you through to the end or will you agree to assistance?
I can see how this is a conversation no one really wants to have, but assuming you’ve spent your life taking care of your children, it’s important for both of you to sort these things out. Becoming a full time caregiver is hard and no matter how you slice it, it is a burden. It will ease that burden considerably for your children if you set a clear point, like the first time you need assistance using the bathroom or fall down and can’t get up, that you find a full time caregiver to either assist you at home or you move into a nursing home.
Trust me, one of the best last gifts you can give your kids is to be assertive and reasonable about the kind of help you want towards the end.
You may want full time help, either at home or in a care facility, but find that it’s financially impossible. Costs for a nursing home run over $200 for the average shared room. Assisted living facilities come in around $120 a day and even adult day care adds up to around $70 a day.
So… families with 8 children may be onto something there. Since splitting those numbers 8 ways are about the only way they become a reasonable addition to the already existing bills.
Long term care insurance can ease that burden.
There are 5 ways to find long term care coverage:
- 1.Individually through licensed insurance agents or brokers (make sure they are licensed specifically for long term care).
- 2.Employer Sponsored Plans
- 3.Organization Sponsored Plans (AARP, Knights of Columbus, Retirement Clubs, etc)
- 4.State Partnership Programs
- 5.Joint Policies that cover spouses, partners or any two closely related adults.
Be sure you know what your insurance covers.
OK, just one more time for emphasis, be sure you know what your insurance covers.
There are likely limits to the coverage that you need to consider when selecting it. As mentioned above, average nursing homes cost upwards of $200 a day. You’ll want to check what the coverage amount is before you sign on the dotted line. You may look at your finances and feel you can afford coverage that only covers $100 or so a day of that cost for a lower premium. You might prefer to pay a higher premium for $250 a day of coverage (because don’t forget to factor in a few decades of inflation, actually, you should opt for policies with inflation protection) to make sure you’re fully covered. Be sure to discuss these things with the insurance carrier.
Also, make sure you understand all the different allotments, because that insurance won’t cover a blanket $100 a day. It will cover $100 a day for a nursing home. That same policy might only cover $50 a day for a caregiver, still leaving you to come up with an additional $20 or so a day to fully cover their services.
Other types of coverage might instead offer up to a certain amount of coverage, such as $100,000. Keep in mind though, $100,000 is roughly a little over a year in a nursing home. Yes, that will cover a lot of people, but if you have a history of illness requiring longer periods of care, like strokes or, again, Alzheimer’s, in your family, you may want to consider higher limits.
Another thing to double check is coverage exclusions and at what point the coverage begins to pay out. For long term care, coverage often kicks in once several activities of daily living (ADLs) have been compromised. These consist of eating, bathing, using the bathroom, walking or remaining continent. Your insurance carrier should be able to provide you with a list of ADLs. Exclusions are self-explanatory, but you want to confirm that there are no exclusions like common illnesses like heart disease, diabetes or cancer.
You also want to double check the waiting period, which is often between 0 to 100 days. This is the amount of time between when you begin to need services and when the insurance actually kicks in. Clearly, the shorter number of days, the higher the premium.
If you want to play around a little with benefit options, you can explore costs with Federal Long Term Care Insurance here. I’m not recommending them (I don’t have long term care insurance, I don’t feel qualified to recommend anyone), merely letting you know they have a cool calculator tool.
I also really don’t like that Federal has a 90 day waiting period – 3 months of nursing home payments are a little too rich for my blood. I also don’t think the calculator is really sure about what to do with a 30 year old either, since I’m not paying $90 a month for the next 50-60 some years… although it did give me a heck of a lot of coverage.
You should always shop around for insurance rates.
Long-term care insurance is very important. I used to work as a valuation analyst, and a few of my clients owned long-term care facilities and their costs were outrageous. I wasn’t sure how anyone could afford that unless they had the correct insurance.
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I know, I can’t believe what they cost! I do understand that it’s a strange mixture of an apartment and a hospital that you’re paying for… but still, an unreasonable amount of money is an unreasonable amount of money.
I do not own it myself, but I will once I turn 50, and I encourage all of my clients over 50 to consider it. My grandmother recently went through a need for long term care coverage and it cost the family over $9,000 a month. It is such a huge burden, and I imagine that it will continue to grow.
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$9,000? I’m not super surprised, but I don’t understand how companies can charge that in good conscious.
DH and I don’t have a long term care insurance at the moment but it’s something we have thought about especially as we are dealing with two elderly moms who have varying health concerns and neither of them have long term care insurance.
This is such great advice! I really wish my grandparents had bought long term care insurance. When my Granddad was diagnosed with dementia, all of his treatment (adult day care, home care aides, etc.) was incredibly expensive. Since he’s passed away, his Social Security and pension all go to my grandmother, but that’s not enough money for her to be in a decent assisted living facility, so my mom takes care of her. It’s disgusting that some sub-par place costs $7,000, and the nicest place in our city costs nearly $10,000. That’s unaffordable for so many people, and it places an unfair burden on their children.
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We bought LTC Insurance nine years ago — it was a group plan offered by a former employer that I was able to take with me when I moved to a new job. After watching my husband’s family worry about finding affordable care for my mother-in-law, I’m very glad we have our policy.
If you’re trying to assess a plan, I did a series of posts in July about how we reviewed our plan to decide if it still met our needs. Long Term Care insurance is a complicated purchase but soooo very needed (in my opinion).
I agree. And I was astonished to see all the not-so-little things you need to double check to make sure the policy isn’t going to screw you when you actually need it.
I have not really heard much about LTC at all. It started to come up as my grandma’s health was failing, but by then it was just more of a conversation of, “We should have…,” etc. I am looking into this over the next month. I don’t want to leave my family in the position they have been left in, especially when things can happen so suddenly.
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Yeah, it’s definitely a better thing to be prepared for way in advance of needing it.
I remember that we got this once my grandparents were too old to take care of themselves, and it helped a lot. However, I’ve never understood how many things this insurance actually covers. I’m glad to hear that it isn’t expensive to get this insurance if you get it before you need it, I think I’d like to look into getting this. Thanks for the help!
Hey!!
My parents already had their health insurance. They are on pension. And elderly people can also opt for the senior assisted living where they can seek assistance for anything they need help with. Security is one of the main reasons senior apartments have become so attractive to senior citizens; they can freely roam around the place without having to worry. If the health of a senior resident is at risk, then the management at the senior living community will recommend moving that resident to a nursing home where they can be properly treated.
Thank you so much for great sharing.
If you’re seeking a home health aide who will become your loved one’s primary companion during the day, it’s important to discuss cultural, age and gender differences with the care recipient and the rest of your family first, so you can find the right match. Even better, King suggests a trial period of a week or so “to see how everyone feels about the caregiver and how the caregiver feels about the patient and scope of work.”
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