 Posted: Thu Sep 15, 2011 11:51 am Post subject: |
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Long-term care insurance is a policy that covers what Medicare and other health insurances don’t.
This is important when you go into a long term condition in which you can’t do your daily tasks like getting to bathroom, bathing etc and need help of others.
Earlier these policies covered only things like nursing home care. But now it’s coverage is more comprehensive in nature and pays for extensive services in various settings, such as, adult care centers, special care centers, nursing homes and even your own home.
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jane.ross
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| Posted: Fri Sep 16, 2011 4:22 pm Post subject: |
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"Jane" has given rather superficial information that might be unintentionally misleading. It is true that Medicare and traditional health insurance do not pay for most of the expenses associated with chronic disability. When it comes to "Skilled Nursing Facility" (SNF) care, Medicare only pays 100% for the first 20 days, then the patient pays much of the expense during the next 80 days, and after 100 days in an SNF, the patient pays 100% of the cost. If it's not an SNF, Medicare pays exactly $0, and most people DON'T need SNF care. Health insurance pays almost none of that expense.
Long Term Care Insurance (LTCI) provides benefits in a variety of ways for persons with chronic disabilities that impair them in two or more of six defined Activites of Daily Living (ADLs): Eating, Dressing, Bathing, Toileting, Continence, and Transferring. Additionally, and without any impairment in ADLs, a diagnosis of Alzheimer's disease or other "cognitive impairment" (Huntington's disease and senile dementia are two of several) triggers benefits from a LTCI policy.
To be "impaired" in any ADL means that a person cannot perform the activity on their own (requires "hands on assistance"), or he needs supervision ("stand-by assistance") to prevent injury to himself or others when performing the ADL.
Benefits in a COMPREHENSIVE LTCI policy are provided for all levels of non-acute nursing care: Skilled, Intermediate, Custodial, and Home Care or Community-Based Care (Adult Day Health Care). Additional benefits include respite care (for a primary caregiver), home modifications (ramps, grab bars, etc.) to accommodate a person's disability, and other benefits that can vary from policy to policy.
A LTCI policy, and its premium cost, is designed around a daily cash benefit amount and a benefit duration period (such as $200/day for 1080 days (3 years). The benefit would begin following an ELIMINATION PERIOD of 0-365 days (the longer the elimination period, the lower the premium for the benefit amount and duration selected). Most policies have a "waiver of premium" provision that suspends all future premium payments during a person's period of disability (which could mean no payments for the remainder of their lifetime). Policy may be purchased with a guaranteed annual "cost of living" increase in the daily benefit amount. While not required to be purchased (except in LCTI "Partnership" policies), it is HIGHLY RECOMMENDED to do so. The cost of care is constantly rising, and an LTCI policy benefit will fall seriously behind those increasing costs over many years without the COLA rider. This can increase the cost by 50% or more.
Premiums are also based on the age of the applicant. Some companies provide substantial discounts when a husband and wife apply for LTCI at the same time (even if one is not approved). Younger applicants pay lower premiums (but premiums for persons age 18-40 are generally the same). Costs begin to rise quickly after age 55-60.
The good new is this: no matter how much a person pays in premiums, even if over many years, the full cost of the insurance is typically recovered in a matter of 3-6 months of confinement at the maximum daily benefit.
To protect against the inevitable increase in premiums that many folks will see in the future, a few companies now offer 10-pay and 20-pay LTCI policies. These policies become FULLY-PAID UP after 10 or 20 years of premium payments, with no additional premiums due after that. Persons in their 40s and 50s should consider this alternative . . . it would allow you to remain covered for your LTC needs for the rest of your lifetime without ever having to pay another premium . . . EVER! It may be more expensive today, but it will save you thousands of dollars (probably tens of thousands) over your lifetime.
Too many folks think of LTCI as "nursing home insurance", but LTCI provides cash to maintain a person's independence. A $200 daily "at-home" benefit could allow most persons to remain and receive care in their own home instead of a nursing home.
LTCI is a tremendous product! An increasing number of life insurance policies are now being made available with an LTCI rider that permits the use of the death benefit to pay for LTC expenses. While less costly than a stand-alone LTCI policy, if a person would consider trading their life insurance death benefit (for their beneficiary) for their own long-term care needs, it can be of significant value.
But if a person needs to leave a death benefit for their beneficiary AND wants to make sure most or all of their LTC expenses are provided for, too, then the two needs should be addresses with separate policies, each of which provides its unique benefit as needed.
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MaxHerr
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