5 Frequently Asked Questions About Long-Term Care Insurance

Although our society’s growing life expectancy can certainly be a positive, it creates a dilemma for many Although our society’s growing life expectancy can certainly be a positive, it creates a dilemma for many Americans if they haven’t prepared for long-term care. Long-term care insurance is one option to consider, but the plans can be expensive and confusing. Here are five of the most common questions and some information to get you started. We recommend consulting with an experienced insurance or senior care specialist before making any decisions.

1. What is long-term care insurance exactly?

Major medical insurance and Medicare will only cover skilled care. However, long-term care differs from traditional medical care in that you are not necessarily sick. Rather, you require assistance with the basic activities of daily living. Long-term care insurance covers these kinds of expenses in a variety of settings such as nursing homes, assisted living and home care. Agencies like 5 Star Home Care accept long-term care insurance.

2. Won’t I be covered by Medicaid if I can’t pay for long-term care?

This is a common misconception. Medicaid will not pay for long-term care until an individual has used up their assets. Obviously this is not an ideal scenario. Among many potential financial hardships, it also means there will be no inheritance for future generations. It’s also important to note that federal law states that nursing homes only have to accept a certain number of Medicaid patients if they participate. Once they reach their quota, they can refuse Medicaid patients. This can greatly limit your options, and might mean you have to choose a facility far from home. It also puts home care out of the equation for many.

3. Do I really need long-term care insurance?

Since no one can predict their health, the best you can do is evaluate the factors most likely to affect your long-term needs.

• Your age and health – Policies increase as you grow older, and some insurers won’t cover certain diagnoses. You may also want to consider purchasing your policy before you turn 64 and qualify for Medicare. With the number of preventative screenings offered, your doctor could uncover a condition that would prevent you from being approved.
• Family history – If you have a family history of certain illnesses that require long-term care, you may want to invest in long-term care insurance before you have to pay more. You may also wish to extend the number of years you’re covered depending on your family’s history. Benefit periods are usually three to five years.
• Your current income and assets – If your income is low and you have few assets when you need care, you might qualify for Medicaid fairly quickly, making long-term care insurance an unnecessary expense. See question 4 for more on this.
• Your support system – Do you have family or friends who could provide care on a regular basis? Are you comfortable with this arrangement, and are they? It’s best to have the conversation early. 5 Star Home Caregivers might be the solution, if family or friends are not able to take on this responsibility.

4. Can I afford long-term care insurance?

Since long-term policies are expensive, they may not be right for everyone. Here are some guidelines excerpted from AARP:

• If premiums are less than 5% or less of your anticipated annual retirement income, it’s likely affordable, just bear in mind that the premiums will go up over time.
• If premiums are 5% or more of your anticipated annual retirement income, make sure your budget can handle the cost, and consider the increases over time.
• If you have over $1.5 million in assets, you may have enough to fund your own long-term care.

5. Can I use long-term care insurance to pay for home care?

Yes. But keep in mind that not all policies pay the same for similar services. Be sure to ask as many questions as necessary to understand your individual policy. For example:

• Is there a waiting period before your benefits begin?
• How long is the benefit period, and when does it begin?
• What is the maximum daily benefit?

If staying in your home as you age is your preference and priority, long-term care insurance may be the right option for you. While thinking about a future where you need help taking care of yourself is the last thing you probably want to do, it’s worth it. By planning ahead you can reduce the stress on your family and give yourself a greater control over your future.

5 Star Home Care serves many clients who utilize their long-term care policy to pay for our services. Contact us to learn more so you can be prepared and make sure home care is an option.