long term care (ltc)

 A long-term care insurance policy helps cover the costs of that care  when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:

• Your home
• A nursing home
• An assisted living facility
• An adult day care center

Considering long-term care costs is an important part of any  long-range financial plan, especially in your 50s and beyond. Waiting  until you need care to buy coverage is not an option. You won’t qualify  for long-term care insurance if you already have a debilitating  condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s. 

Among 65-year-olds, 75% will use some form of long-term care in the  years ahead, according to the U.S. Department of Health and Human  Services. Regular health insurance doesn’t cover long-term care and Medicare won’t come to the rescue, either; it covers only short nursing home  stays or limited amounts of home health care when you require skilled  nursing or rehab. It does not pay for custodial care, which includes  supervision and help with day-to-day tasks. If you don’t have insurance to cover long-term care, you’ll have to  pay for it yourself. You can get help through Medicaid, the federal and  state health insurance program for those with low incomes, but only  after you’ve exhausted most of your savings.
People buy long-term care insurance for two reasons:

1. To protect savings. Long-term care costs can  deplete a retirement nest egg quickly. The median cost of care in a  semi-private nursing home room tops $80,000 a year, according to  Genworth’s 2016 Cost of Care Survey.
2. To give you more choices for care. The more money  you can spend, the better the quality of care you can get. If you have  to rely on Medicaid, your choices will be limited to the nursing homes  that accept payments from the government program. Medicaid does not pay  for assisted living in many states. Buying long-term care insurance might not be affordable if you have a low income and little savings. The  National Association of Insurance Commissioners says some experts  recommend spending no more than 5% of your income on a long-term care  policy.

Based on a 2016 Cost of Care Survey (Source:Genworth). The annual median cost of Long Term Care is as follows:

• Home Health Aide - $46,332
• Homemaker Services  - $45,760
• Adult Day Care - $17,680
• Assisted Living Facility - $43,539
• Nursing Home Care - $82,125 (Semi-Private Room) OR $92,378 (Private Room)

 To buy a long-term care insurance policy, you fill out an application with your broker and answer all health questions on the application. The insurer may ask to see medical records  and possible do a phone interview with the applicant. From here the applicant chooses the amount of coverage they want. The policies usually cap  the amount paid out per day and the amount paid during your lifetime.
Once you’re approved for coverage and the policy is issued, you begin paying premiums.Under most long-term care policies, you’re eligible for benefits when  you can’t do at least two out of six “activities of daily living,”  called ADLs, on your own or you suffer from dementia or other cognitive  impairment.
The activities of daily living are:

• Bathing
• Caring for incontinence
• Dressing
• Eating
• Toileting (getting on or off the toilet)
• Transferring (getting in or out of a bed or a chair)

When you need care and want to make a claim, the insurance company  will review medical documents from your doctor and may send a nurse to  do an evaluation. Before approving a claim, the insurer must approve  your “plan of care." 

Under most policies, you’ll have to pay for long-term care services  out of pocket for a certain amount of time, such as 30, 60 or 90 days,  before the insurer starts reimbursing you for any care. This is called  the “elimination period.” The policy starts paying out after you’re eligible for benefits and  usually after you receive paid care for that period. Most policies pay  up to a daily limit for care until you reach the lifetime maximum.