Long Term Care Insurance – Act Now Before it is Too Late

We generally do not think about long-term care until and when we experience it in our lives. Oftentimes it takes the form of a loved one (typically a parent) who becomes suddenly disabled and the family (typically the children) steps in to assist. That assistance soon begins to take more and more of our time, affecting our jobs, our own families, and ultimately our lives. When this happens we all become fast studies in the field of long term care and, unfortunately, when there is inadequate planning, it is often too late. We are transformed from loved ones into long term care providers. Out relationship, with respect to our disabled loved one, changes forever and the stress that results can easily strain a family to the breaking point. If anyone has ever had a parent become disabled you know what I am talking about.A misconception is that long-term care is covered either by health insurance or by Medicare. Health insurance does not pay for long-term care and Medicare, Part A, will only cover the first 20 days of long-term care 100%, but only under certain very restrictive conditions. Beyond the first 20 days, Medicare requires you pay the first $133 (2009) of expenses per day and this limited coverage only lasts for 80 days. Then you are on your own.The sad fact is that long-term care, when properly planned for, can be a manageable process that leaves the family relationships in tact and allows us to instead act in an oversight capacity, rather than in a hands-on custodial care capacity. Stress is significantly reduced, our jobs do not suffer, and our direct family unit stays in tact as well.Long-term care refers to assistance needed by anyone for a chronic illness. A chronic illness is long-term illness that will not go away, such as Alzheimer’s, Parkinson’s, emphysema, arthritis, diabetes, heart disease, a stroke which affects physical activities permanently, and sudden accidents which leave you permanently disabled. Long-term care may require skilled medical care or non-skilled medical care (custodial care).

Skilled medical care is often performed by licensed medical professionals such as physicians, registered nurses, licensed practical nurses and physical, occupational or speech therapists in a home, community or institutional setting. It also includes assistance with administering medicines. Skilled medical care is usually required when there is an acute condition that restricts an individual’s ability to perform certain physical tasks. It may also be required where a debilitating condition turns into a chronic (permanent) condition which can no longer be ignored.Non-skilled care, or custodial care, is generally needed where a physical condition impairs someone from performing what are called activities of daily living. Such activities include eating, bathing, dressing, toileting (assistance to and from the toilet), continence (bowel movement control issues) or transferring from a bed to a chair etc. Most often, non-skilled care is informal, meaning performed by family members. In fact, about 80% of all long-term care is informal, while 20% is provided by paid, trained professionals. The reason for this is that most families do not plan properly for long-term care, meaning they do not have the financial resources to pay someone to assist the family in providing long-term care services.Non-skilled care typically includes homemaker services and personal assistance. Homemaker services refer to assisting the patient with home-related activities. It may include preparing meals, managing money, shopping, housework and the like. Personal assistance services involves assisting the patient in the performance of activities of daily living, It includes feeding, bathing, dressing, transferring the patient to and from the bed and a chair, help in the bathroom and perhaps even changing bed pans and the like. When our patient is heavy or tall, these tasks require the assistance of a loved one who has the physical strength to meet the challenge. If no such loved one exists, one must somehow be found. Oftentimes this requires paying for the services of a provider who has the physical strength needed. This costs money.Inadequate planning means that whatever financial resources are available will be used to help assist our disabled family member get through each day. Often retirement assets are diverted to pay for long-term care services. This means there will be less money for retirement needs. Eventually, our retirement assets dry up and the only other option is transferring our loved one to a Medicaid facility. Some are very good, but more often than not, our loved ones will not receive the care we all feel they deserve. It’s a no-win situation and everyone in the family unit is negatively affected. Who wants to put their parent in a Medicaid facility due to financial limitations? I know I wouldn’t. But it happens. It happens every day and with the graying of our baby boomer population, it is going to become a common occurrence to those who did not plan properly.What can you do? The key is to properly plan for your long-term care needs while you are in your 40’s or 50’s by securing the services of a Certified Financial Planner or long-term care insurance agent. It is in these age groups that long-term care insurance is most affordable. Premiums for a 45 year old can be as low as $1,000 per year. The cost goes up dramatically as you get closer to 60 years of age. A 65 year-old can pay as much as $8,000 per year for long-term care insurance. Proper planning means designing a long-term care policy that meets you minimum needs. Some policies pay a daily benefit for 2 years, 3 years, 5 years or for life. Obviously the longer the term, the higher the premium. A typical long-term care policy usually carries a three-year benefit payout term, includes an inflation adjustment component and a reimbursement daily benefit. The daily benefit needed depends on the cost of care where you live. A daily benefit in the northeast of $150-250 is not uncommon. Most policies reimburse on a days of service basis. This means services must be provided in order to receive a reimbursement. Most policies also include an elimination period of between 30 days and 90 days. With a 30 day elimination period the patient must pay for long-term care services for the first 30 days, unless the care qualifies for Medicare.

The best advise I can give you is to secure the services of a Certified Financial Planner, or an insurance agent who is certified by the Corporation for Long-Term Care. Either can craft a long-term care policy that is affordable and meets your needs. Remember, each year you put off planning for long-term care will cost you in higher premiums and exposes you to the risk of needing long-term care.

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