Long-term care refers to the ongoing services and support needed by people who have chronic health conditions or disabilities.
There are three levels of long-term care:
• Skilled care: Generally round-the-clock care that’s given by professional health care providers such as nurses, therapists or aides under a doctor’s supervision.
• Intermediate care: Also provided by professional health care providers, but on a less frequent basis than skilled care.
• Custodial care: Personal care that’s often given by family caregivers, nurses’ aides or home health workers who provide assistance with what are called “activities of daily living” such as bathing, eating, and dressing.
Long-term care is not just provided in nursing homes. In fact, the most common type of long-term care is home-based care. Long-term care services may also be provided in a variety of other settings, such as assisted living facilities and adult day care centers.
Why is it important to plan for long-term care?
No one expects to need long-term care, but it’s important to plan for it nonetheless. Here are two important reasons why:
The odds of needing long-term care are high:
• Approximately 40 percent of people will need long-term care at some point during their lifetimes after reaching age 65*
• Approximately 14% of people age 71 and older have Alzheimer’s disease, a disorder that often leads to the need for nursing home care**
• Younger people may need long-term care too, as a result of a disabling accident or illness
The cost of long-term care is rising:
Currently, the average annual cost of a one-year nursing home stay is $68,255* and in many states the cost is much higher. In the future, long-term care is likely to be even more expensive. If costs rise at just 3percent a year (a conservative estimate), in 20 years one-year nursing home stay will cost approximately $123,276.
*National Clearinghouse for Long-Term Care Information, U.S. Department of Health and Human Services, 2008
**Alzheimer’s Association, 2008
Doesn’t Medicare pay for long-term care?
Many people mistakenly believe that Medicare, the federal health insurance program for older Americans, will pay for long-term care. But Medicare provides only limited coverage for long-term care services such as skilled nursing care or physical therapy. And although Medicare provides some home health care benefits, it doesn’t cover custodial care, the type of care older individuals most often need.
Medicaid, which is often confused with Medicare, is the joint federal-state program that two-thirds of nursing home residents currently rely on to pay some of their long-term care expenses.
But to qualify for Medicaid, you must have limited income and assets, and although Medicaid generally covers nursing home care, it provides only limited coverage for home health care in certain states.
Should I buy long-term care insurance?
Like other types of insurance, long-term care insurance protects you against a specific financial risk — in this case, the chance that long-term care will cost more than you can afford.
In exchange for your premium payments, the insurance company promises to cover part of your future long-term care costs. Long-term care insurance can help you preserve your assets and guarantee that you’ll have access to a range of care options. However, it can be expensive, so before you purchase a policy, make sure you can afford the premiums both now and in the future.
The cost of a long-term care policy depends primarily on your age (in general, the younger you are when you purchase a policy, the lower your premium will be), but it also depends on the benefits you choose. If you decide to purchase long-term care insurance, here are some of the key features to consider the benefit amount, benefit period, elimination period, types of facilities included and inflation protection.
Your insurance agent or a financial professional can help you compare long-term care insurance policies and answer any questions you may have.
For future editions we want to hear from you, please e-mail your questions or comments to KoeleGodfrey@lpl.com or call us at (616) 931-1223 or toll Free (866) 512-7164. Visit our Web site at www.KoeleGodfrey.com for more information.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. This article was prepared by Forefield. Securities and Financial Planning offered through LPL Financial, Member FINRA/SIPC.
Zeeland, MI —
