What Is Long-Term Care Insurance and Is it Right for You?


If you ask an adult what’s most important to them, independence, good health, and the ability to afford their lifestyle are probably at the top of the list. In fact, a recent AARP survey found that nearly 80% of folks over 50 want to continue living in their homes for as long as possible.

In order to maintain their independence and health while residing in their home, many aging adults need some form of custodial care, home health aide services, or in home nurse care. And as anyone living in the United States knows, long term care expenses can really add up. So if you or a loved one are anticipating a need for care, you might be wondering how you’ll afford it—and that’s where long term care insurance comes in.

What is long term care insurance, exactly, and is it right for you? The team at Alliance Homecare is here to answer these questions and provide deeper insight into this type of health coverage.

What Is Long-Term Care Insurance?

Long-term care insurance (LTCI) is a healthcare policy covering some or all of an elderly individual’s ongoing healthcare costs. Sometimes referred to as nursing home insurance, this type of insurance product is typically paid for through a monthly premium, ranging from $250 to $1000, give or take.

While policies vary, they often cover at-home care services like in-home nursing or palliative end-of-life care, as well as care provided at a nursing home care facility, assisted living facility centers, and adult daycare facilities. Long term care insurance can also cover expenses for disabilities and chronic medical conditions.

Why Is Long-Term Care Insurance Important?

You can’t always predict medical costs. However, those in the 65-and-older camp can expect to need assistance sooner or later, whether it’s ADL (activities of daily living) care a few hours a day, post-surgical care, or in-home hospital care.

Unfortunately, most standard health insurance policies don’t cover long-term care, and Medicare generally only covers short-term nursing home stays and limits at-home care services. Additionally, Medicare doesn’t include ADL care. Supplementing your coverage with LTCI will help you protect your savings and give you more options of the type of care you’d like to receive.

Protecting Your Savings

Without long-term care insurance, you’ll have to pay out-of-pocket for many services and care plans. This could result in burning through your savings or retirement funds quicker than expected, which could affect your housing choices, everyday lifestyle, and ability to live independently.

As mentioned above, Medicare doesn’t offer comprehensive coverage. However, about 15% of their annual spending still goes to health care costs for those enrolled in the program. In contrast, a long-term care insurance premium might only account for 2% to 5% of your spending.

Medicaid offers some coverage for low-income seniors, but typically only after you’ve exhausted a majority of your savings and liquidated most of your assets. Long-term care insurance will reimburse you for a wide range of medical and ADL services, thereby protecting your hard-earned savings and assets.

More Care Choices

The ability to make choices about your living situation and the care you receive is a crucial component of maintaining independence. Relying on Medicare, Medicaid, or regular health insurance will limit your options to facilities within these government programs or your provider network. And many services, unfortunately, won’t be covered.

Here at Alliance Homecare, we know how important living at home is for a majority of aging adults. Sadly, many struggle to afford the care that allows them to remain in a comfortable, familiar environment. But with long-term care insurance, they can choose to stay in their abodes while getting the medical assistance they need.

Not only that, but this type of policy allows you to expand on the at-home services you receive. In addition to private nursing care, you can arrange for additional services, such as self-care tasks, errands, medication reminders, medical appointments, food prep, and light housework.

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When Family Caregivers Have Limited Capacities

Long-term care insurance protects an individual’s finances and independence. Though it’s tough to foresee exactly when and how this type of policy will come into play, it’s often vital for those who would otherwise rely on family members for support.

Baby boomers are living longer than the generations before them, and by 2030, they’ll all be 65 or older. Among those who didn’t expect to live so long, many don’t have a plan for care, which leaves family members with the burden of caregiving.

Additionally, not all families live close enough to provide ongoing care, and many children of baby boomers are still supporting offspring of their own. Long-term care insurance can cover the costs of in-home assistance, offering relief for loved ones with limited capacities.

Is LTCI Right for You?

So, is long-term care insurance right for you or your aging loved one? Yes, it’s a smart decision for all seniors, who almost inevitably will need some form of medical assistance as they age. According to a survey by the U.S. Department of Health and Human Services, 70% of people over 65 will have a critical need for long-term care.

Realizing that you’re not covered through Medicare, or your regular insurance policy can be alarming, especially when a sudden need for care arises. If you or your loved one receive a diagnosis for a chronic illness, suffer from a debilitating injury, requires surgery, or struggle to complete everyday tasks due to dementia, you’ll likely need assistance for longer than a few weeks. The cost of care without LTCI is often shocking and can be devastating to families.

For instance, the median cost of hiring a home health aide for eight hours a day is upwards of $44,000 a year, and a private room in a nursing home, living facility, or nursing facility is almost twice as much. So while your monthly premium will be a little higher, a long-term care insurance plan can ultimately save you tens of thousands of dollars over the course of just a year, let alone several years.

Like life insurance, LTCI premiums are typically higher for those who enroll later in life. By the time you realize you have a critical need for long-term insurance, you could be faced with limited coverage and a higher rate. Also, some policies have what’s called an elimination period, meaning the policyholder won’t have coverage for the first one to three months after enrolling. Needless to say, the sooner you sign up, the better.

Get in Touch with the Home Care Experts at Alliance

Navigating a health insurance policy can be a daunting, overwhelming task, even for the best of us. But with support from experts and an open mind, you’ll find something that works for you and your family.

We recommend shopping around and getting quotes from different long-term care insurance providers to compare prices and plans. Additionally, it’s a good idea to consult with a lawyer who specializes in the topic. While enrolling in LTCI isn’t something you should rush, it’s also not something you want to neglect.

Contact us at Alliance Homecare in New York for questions about insurance, availability of home health aides in Manhattan, or to learn more about the long-term care services and how at-home care works.

 

External sources:

  1. https://www.aarp.org/research/topics/community/info-2018/2018-home-community-preference.html
  2. https://www.huduser.gov/portal/periodicals/em/fall13/highlight1.html
  3. https://www.prb.org/resources/aging-baby-boomers-to-face-caregiving-obesity-inequality-challenges/
  4. https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html
  5. https://aspe.hhs.gov/basic-report/what-lifetime-risk-needing-and-receiving-long-term-services-and-supports
  6. https://www.genworth.com/aging-and-you/finances/cost-of-care.html
  7. https://www.nerdwallet.com/blog/insurance/long-term-care-insurance/
  8. https://www.aarp.org/caregiving/financial-legal/info-2018/long-term-care-insurance-fd.html
  9. https://www.investopedia.com/terms/l/ltcinsurance.asp

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