It’s a given that you might one day require long-term care. That implies that you might require assistance with basic daily tasks like washing, dressing and eating at home; access to community resources like adult day care and transportation; or continued care in a nursing home, assisted living community or other facilities. Long-term care (LTC) insurance is one way to pay for these services. There is a lot to learn, though, before you commit to a policy. The market has seen significant transformations recently.
What you should know is as follows.
Why Make Long-Term Care Plans?
In their later years, over 70 percent of Americans who reach the age of 65 will require some type of long-term care, according to a study by the Urban Institute and the U.S. Department of Health and Human Services. Nearly half of adults will require some form of paid support, even if some will manage with unpaid care from family members and others. A quarter of patients will require paid care for more than two years, and 15 percent will require nursing home care for longer than two years.
Depending on how long you need care, where you reside and how urgent your demands are, the cost of care varies greatly. Services can be paid for in a variety of ways.
Traditional Medicare, the government-run health insurance program for seniors, only covers a limited amount of skilled care immediately following any hospitalization for an illness or injury. It does not cover long-term care. Although it is limited, some Medicare Advantage plans from private insurers provide supplementary coverage for services like meal delivery and transportation to doctor’s appointments.
Standard Long-Term Care Insurance
Traditional long-term care insurance operates similarly to home or auto insurance: You typically pay premiums for the duration that the policy is in force, and you submit claims if you ever require the covered treatments.
To assist with paying for services inside or outside of your house, you can choose a small amount of coverage or a lot. Standard policies specify the daily or monthly maximums up to a lifetime cap or a set number of years. There may be different allowances for care at your home, nursing home or anywhere else. To protect yourself from inflation, you pay extra for advantages that increase over time.
Hybrid Insurance
Most long-term care insurance policies on the market today combine long-term care coverage with another benefit, typically life insurance or, less frequently, an annuity. These are referred to as linked-benefit or hybrid policies.
The majority of hybrid life insurance policies operate in the same way: You make one large payment or a fixed sum divided into multiple annual installments. In exchange, you receive long-term care insurance that has features similar to those of conventional plans, as well as a portion of life insurance that will be paid to your beneficiaries even if you never utilize the long-term care benefits. If you do utilize long-term care benefits, the life insurance payout will be diminished or canceled. If you decide you no longer want the coverage within the first few years of the policy, you might be able to get your entire payment returned. Typically, premiums are not continuing; therefore, they cannot increase.
Care Financial is here to help you explore the different options you and your loved ones have. Contact us today to get started at (251) 633-7122 today.
