Long-Term Care Insurance

Long-Term Care Insurance & Medicaid

See also: Options for Lifelong Care

Long-term care insurance for nursing home and home health care may be important planning tool. A relative newcomer to the health insurance market is long-term care insurance.

Long-term care policies, typically covering nursing home care, home care or both, have developed in response to the high cost of such care in either setting. A commonly cited statistic is that 43 percent of people age 65+ will require long-term care services (LTC). Aging America: Trends & Projections. US Senate Special Committee of Aging. In "The Case For Nursing Home Insurance," Douglas Stanton citing the Federal Agency for Health Policy stated that "half of all women and one-third of all men turning age 65 will spend time in a nursing home. Stanton, Douglas R., "The Case For Nursing Home Insurance," Trusts & Estates July 1994) "Sixty percent of people over age 75 need some form of long-term care, and nearly one-half of those stay in nursing homes for about three years." Baskies, Jeffrey "A Deposit-Based Approach To Long-Term Care Insurance Planning" Trusts & Estates June 1997.

Nursing home care in some areas of the nation has been estimated to cost, on an average, $90,000 per year per person.

The best facilities may charge over $100,000 annually. The cost of home care services can easily rise into the same range.

Double or triple these numbers if both spouses require long-term care. Clearly, only the most affluent estates can survive several years of costs at these levels.

Medicare is no answer to this problem. Medicare pays for only 100 days of skilled nursing home care per spell of illness, but not for the custodial care or assistance with the activities of daily living often needed by the frail elderly. Similarly, Medicare's home health care benefit is limited. The price a person must pay to qualify for Medicaid is steep. The client must either impoverish herself, or undertake a carefully planned program to transfer most of her financial resources.

A long-term care insurance policy should be reviewed for the following provisions. Often cost will determine the practicality of the inclusion (or exclusion) of certain policy features:

- What triggers coverage?

- When does coverage begin?

- What level of care is covered?

- What amount per day is covered? (indemnified or reimbursed)?

- Inflation rider?

- Length of coverage?

- Affordability?