Long-Term Care Insurance
Long-term care insurance is one of the least understood types of insurance, yet it is one of the most important. People often pre-maturely dismiss the idea of long-term care insurance by saying “it won’t happen to me”, “I don’t want to live in a nursing home”, or “Medicare will cover me”. All of these statements demonstrate the confusion surrounding long-term care insurance.
The fact is, we are living longer lives. Medical issues, however, often arise out of this longevity. Studies indicate that over 50% of the population will need long-term care sometime in their lives. Long-term care is not just for older people. Younger people are increasingly dealing with this issue because of cancer, strokes, Parkinson’s disease, multiple sclerosis, and accidents.
For most people, a nursing home is the last place they want to be to receive care. Fortunately, there are many options available for long-term care, so often, a nursing home is the last place they would go. Home health care and assisted living facilities are often much more comfortable and appealing choices. Long-term care insurance can help you preserve these options.
Medicare generally does not pay for long-term care. Medicare only pays for skilled nursing in a home or facility that is medically necessary. Most long-term care is not skilled care though; it is custodial (non-skilled) care. Custodial care is care that helps people with their activities of daily living like bathing, dressing, and using the bathroom. Medicare does not pay for custodial care.
Long-term care is expensive. It could cost you $25,000/year just to have a home health aide visit you for 2 hours/day. An assisted living facility could cost you about $35,000/year and a semi-private nursing home facility could cost about $63,000. These figures are averages for the San Diego region. There are big variances between the cost of the high and low service providers.
There are several ways to pay for long-term care.
- Self-insure: People with substantial assets or incomes can pay for it out of their own pocket.
- Family assistance: People can combine their own resources with financial assistance from their family to meet their obligations.
- Government: People can spend down all their assets and then qualify for Medicaid (welfare)
- Insurance: People can decide to transfer some of the risk of needing long-term care to an insurance company by buying an insurance policy.
Long-term care insurance can help you maintain your independence, your standard of living, and avoid being a burden to family. It can protect your current assets and your future estate. Most importantly, it can give you a choice among caregivers and your level of care.