According to the U.S. Department of Health and Human Services, a majority of people will need some form of long-term care during their lifetimes. Unfortunately, long-term care can be prohibitively expensive with Americans paying an average of more than $6,000 per month for semi-private rooms in nursing facilities. If you have an elderly loved one, it is important for you to know the options that you might have. At Elder Care Direction, we are committed to helping elderly people and their families to understand the options that are available to them.
What is long-term care insurance?
Long-term care insurance is a type of insurance coverage that pays for the costs of eligible long-term care. You are able to purchase long-term care insurance at any age. This insurance has lower premiums when you are young, but they rise as you grow older.
These policies may cover the following types of costs:
- Help with the activities of daily living
- Room and board in a skilled nursing facility
- Room and board in an assisted living facility
- In-home care
- Adult daycare
- Community care
- Skilled nursing facilities
- Care provided by family members
Since these policies are not standardized, you should compare the premiums, benefits and coverage options that a policy offers. Try to avoid policies that only cover assisted living or residential care in a nursing home. You should also take into account how much the premiums will rise as you age to make certain that you will be able to continue to pay for them.
Elderly married couples might want to consider shared-care riders for their long-term care insurance. These riders offer additional insurance if you require care for a longer period of time than a single LCTI policy allows. If one spouse exhausts the benefits, he or she may then start to use some of the spouse’s policy benefits.
Waiting periods for LTCI
Long-term care insurance companies often have waiting periods that you must satisfy before the companies will begin paying benefits. They generally do not cover short-term care, so they might have waiting periods of 30 days each time that care is needed.
Long-term care and Medicare
Medicare does not pay for most types of long-term care. It only helps to pay your costs if you need rehabilitative or medical care. Medicare covers a maximum stay of 100 days in a skilled nursing facility and for certain types of in-home nursing care. If you will need help with completing such tasks as bathing, eating, and cleaning, Medicare won’t cover these costs.
Long-term care and Medicaid
Medicaid coverage for long-term care varies widely from state to state. In order to get long-term care coverage through Medicaid, you must qualify. In many cases, people are not allowed to have non-exempt assets that are worth more than $2,000.
Lifetime and daily maximums
Many LTCI policies have daily and lifetime maximum benefits. For instance, a policy might pay your costs up to $125 per day or up to 80 percent of the total. You might also have a limit of coverage lasting from two to five years.
Protection from inflation
Some policies offer riders that index your benefits to inflation as you age. These types of policies are more expensive, however.
Long-term care insurance alternatives
There are some alternatives for paying for your long-term care other than long-term care insurance. It is a good idea for you to consider all of your options before you decide.
1. Life insurance
Many life insurance policies contain living benefits riders. these let you take a portion of the policy’s face value if you have been diagnosed with a terminal illness. You can also purchase riders that can provide cash benefits for personal care or nursing care. You can also choose to cash out a whole life insurance policy.
2. Reverse mortgages
If you are older than age 62 and own a home either outright or for which you have significant equity, you may qualify for a reverse mortgage. This is a type of loan that lets you use the value of your home without selling it. You can keep the title to your home as long as you remain living in it, or for as long as your spouse continues to live in it. You do not have to make payments on the loan. Instead, you can sell the home to pay back the lender once you and your spouse no longer live in it. If you pass away, your family members can choose to sell it to repay the loan or can refinance it in their own names to repay what you borrow.
3. Rent out rooms
If you are an active person whose spouse needs long-term care, one option that you might have is to rent out rooms. You could also live with your adult children and lease your home to others to help to pay for your spouse’s long-term care costs.
4. Sell your home
If you live alone and need long-term care, one option that you have is to sell your home to pay for your care costs. If your spouse is in long-term care, you can also decide to sell your home and move into one that is more affordable.
Funding an annuity can offer you an ongoing income. If you continue your policy past the surrender date, you are also able to cash it out without paying a penalty.
Learn more from Elder Care Direction
Long-term care insurance may help you to cover your long-term care costs. To learn more about the advantages and disadvantages of long-term care insurance and your other alternatives, contact Elder Care Direction today to schedule a consultation.