Long Term Care Insurance

Great Regions of Texas

What is long term care?

Long term care insurance provides for the medical and/or personal care services required by a person with a chronic disability or illness. The Health Insurance Association of America estimated in 1998 that at least 40% of the population over age 65 would enter a nursing home before they die. Half of those requiring care are released within six months. Of those remaining, the average stay is 2 ½ years.

The average cost is about $41,000 a year. By the year 2030, the average annual cost of a nursing home stay is expected to increase care due to accidents, cancer, strokes, etc. Approximately 7 million men and women were living in nursing homes in 1997, and some stays have exceeded 20 years.

Who pays the cost of long term care?

The patient or family pays for nursing home care costs not paid by Medical or Medicaid. Only about 8% of nursing home costs are paid by Medicare, which offers limited coverage for the first 100 days in a skilled care facility, and no coverage for the intermediate or custodial care that the vast majority of nursing home residents require. In 1997, Medicaid paid more than 50% of the total nursing home bills.

To qualify for Medicaid the patient must be impoverished under the state's definition. In most states the patient must not have income greater than the cost of the nursing home facility. Other states have "income caps" to limit eligibility for Medicaid, for example, "income cannot exceed 3 times the Federal Social Security Income benefit level for that year." For the most part, the people who need the care, or their families, pay the bill. The most intelligent method to cover Long Term Care is Insurance. This may protect assets from confiscation by the State pay for care.

The need required for long term care.

Some people may require daily medical attention while others may simply need help with the basic activities of daily living (ADL) such as bathing, dressing, taking medication, eating, using the toilet, getting in or out of bed, or walking. A typical nursing home stay commonly falls into 2 categories: short term stays (1-3 months), which involve skilled nursing care, and typically follow a hospital confinement; and lengthy stays that comprise mostly maintenance and custodial care and that average 2.5 years.

Levels of Care

• Skilled Care: Refers to a patient who needs daily nursing care, physical therapy, etc., provided or supervised by professional nurses and/or therapist under physician's orders. Intermediate care. Patient requires only intermittent or occasional rehabilitative care or nursing.
• Custodial care: Patient needs help with activities of daily living (ADL). Does not require a registered nurse or a therapist, but need for such care is based on physician's orders.
• Long-Term Care Insurance: Policy may be issued on an individual or a group basis. The Health Insurance Association of America has prepared a list of "typical coverage" offered by leading sellers of Long-Term Care insurance. ¹

Long term care insurance may provide for:

• Services covered. Skilled, intermediate and custodial care, home health care, adult day care (often covered in the policy)
• Daily benefit: $40-300/day nursing home. $40-300/day home health care
• Benefit eligibility: Physician certifies that benefit is medically necessary
• Benefit period: 2 years, 3 years, 5 years or life
• Alzheimer coverage: Yes (If not preexisting condition)
• Deductible periods: 0-180
• Renewability: Guaranteed
• Pre-existing condition: 6 months
• Inflation consideration: Yes (often 5% annual increase in daily benefit amount)
• Age limits for issuance : 50-84
• Waiver of premium: Yes
• Free look: 30 days

¹Note: Of course, the more benefits included in the policy, the larger the premium. Since every policy may be different, the terms, conditions and limitations of the policy must be carefully reviewed before making a purchase

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