Long-term care (LTC) describes the need for assistance from another person with everyday tasks. This type of care is typically non-medical (custodial) and not covered by health insurance. LTC describes the need for custodial (unskilled) help from another person, for an extended period of time. LTC needs consists of services and support related to a prolonged illness, injury or chronic condition. As more Americans expect to live a long life and the population ages, the need for these services will grow. Planning for LTC should be part of everyone’s retirement planning.Long-term care services include help with “activities of daily living (ADLs)” such as:
The need for LTC may also include monitoring and supervision due to cognitive impairment such as Alzheimer’s disease.
Longer lifespans and breakthroughs in medical technology, combined with changes in family structure, will force people to plan ahead. Ninety-five percent of long-term care in the United States is custodial in nature. Health insurance, disability income coverage, and Medicare do very little to reimburse these costs. None of these products or Medicare fund LTC expenses, only short-term medical (skilled) care.
A LTC care event can be devastating both financially and emotionally. Medicare does not provide is needed for anything but a short length of time and people are unprepared, there may be severe financial and emotional consequences.
How much do Long-Term Care services cost?
Research shows that at least 70% of people over the age of 65 will need LTC services. Between the ages of 40 and 50, 8% of people have a disability that requires long-term care services.
LTC costs can be staggering, especially for the middle class. In 2014, the national median cost for nursing home care was $77,400/year for a semi-private room. The national median rate for assisted living was $42,000/year. The national median rate for a home health aide was $20/hour. Few people realize the full advantages of insuring against LTC risk. Disability insurance is income replacement so the cost of care can wipe out money you may have counted on to pay your everyday expenses.
The average annual cost of care in your state can be viewed by clicking here.
LTCi helps finance long-term care services. It may be purchased individually or through an employer. Most LTCi policies can cover a myriad of care options, including home care, adult day care, assisted living, and finally, nursing home care.
LTCi offers asset and income protection when the need for LTC becomes necessary. It can also greatly relieve physical and emotional stress for family members.
These major factors impact the cost of LTCi:
Purchasing LTCi is a decision with financial consequences, whether or not it is purchased. And, it’s important to note that Medicare does not pay for most long term care services. For example, Medicare doesn’t cover custodial care which is often the reason for care in a nursing home.
If you choose not to purchase LTC insurance and require LTC in the future, your personal savings may be used to finance such care. With LTCi, premium payments help prevent spending personal savings to pay for LTC.
Control and Access to Quality
It’s about choice. LTCi helps ensure full access to a broad range of options when the need for LTC arises; it enables people to choose where and how to receive LTC.
LTCi can provide options to remain in one's home instead of obtaining care in a nursing home or similar setting. Receiving care at one's home will not force the disabled person's children or spouse to become caregivers out of necessity. Instead, children can play whatever role they wish and parents will not feel guilty about interrupting their children's lives.
LTCi can save money and ensure that personal savings and other assets will be used for the purpose originally intended rather than paying for long-term care health expenses.
Peace of Mind
LTCi provides financial security during a stressful time, and is not subject to the woes of the stock market. This type of financial freedom and security is one of the primary reasons people purchase LTCi.
LTC insurance premiums may be tax-deductible. The deduction is more likely to be realized by a business owner than an individual, but there are some guidelines for LTC insurance deductions based on age if an individual itemizes medical expenses. Consult an accountant for more specific information. .
What Determines LTCi rates?Policyholders can choose:
LTCi policies may be similar to “traditional” health insurance products with premiums that are paid over a lifetime or until LTC is needed. There are also life or annuity-based contracts with LTC riders. Premiums for such policies may be paid once, over a set number of years, or over a lifetime.
Agents and brokers also provide service on the policies they have sold, and can help you process claims or with anything else you need regarding your policy. The insurance companies for which agents and brokers sell coverage pay them a commission for their work, so you will not be charged a direct fee if you want to use the services of an agent or broker. You can find agents and brokers who sell long-term care coverage via the Internet, or you may prefer to consult with one in-person. To find an NAHU member near you who can help you purchase long-term care insurance coverage, use our agent locator.
To discover more about LTC partnerships, and the specific types of coverage offered in your state, please click here.
Table of Deductibility - Provides an explanation of LTCi deductibility.
A Shopper's Guide to Long-Term Care Insurance - National Association of Insurance Commissioners
Guide for Caregivers - MetLife Mature Institute has published a guide for caregivers who are helping loved ones get healthcare.