What is Long-Term Care Insurance?

What is Long-Term Care Insurance?
Submitted by: Ryan Copenhaver, New York Life Insurance

You probably know someone who has needed long-term care. Maybe you have witnessed a family member, friend, or colleague struggle with the emotional and financial issues that can come with a long-term care experience. The truth is, no matter when the need arises, because of age, disability, or because of an unexpected illness or accident, long-term care can affect any age group, any social strata, and any geographic location. But what is it and how can you plan for it?
What is Long-Term Care?
Long-term care is additional help you may need due to a lengthy illness, an unexpected injury or accident, or a severe cognitive disorder such as Alzheimer's disease. It is assistance with the everyday tasks, or the activities of daily living (ADLs), such as bathing, eating, dressing, toileting, transferring, and incontinence care. Long-term care may be provided in a variety of locations, from nursing homes and assisted living facilities to adult day care centers and even your own home.
Who needs Long-Term Care?
Most of us strive to live active, healthy lives well into our later years, and indeed as a society, Americans are living longer than ever before. This extended longevity is one of the things that drives the growing need for long-term care - the longer we live, the better the odds that we may need long-term care services. In their 2007 Guide to Long-Term Care, The Health Insurance Association of America reports that it is predicted that some 12 million older Americans are expected to need long-term care in the year 2020. While the majority of long-term care services are provided to seniors, a surprising amount of long-term care services are provided to younger people. In fact, the U.S. Government Accountability Office estimates that 40% of the 13 million people receiving long-term care services are between ages 18 and 64.
Who pays for Long-Term Care?
Long-term care can be expensive, financially and emotionally. An unexpected need for long-term care can have a significant impact on a family's assets and lifestyle. The Health Insurance Association of America reports close to one-fourth of all nursing home costs are paid out-of- pocket by individuals and their families.
Many people mistakenly believe that their health insurance will cover the cost of long-term care. Others believe that Medicare or Medicaid will cover long-term care expenses. While Medicare does provide health coverage for seniors, it is limited in the coverage it provides for long-term care. Medicaid will pay for the cost of long-term care, but you must qualify by meeting strict income and asset eligibility requirements.
Long-term care insurance could be a solution.
Long-term care insurance can be a very smart way to address the challenges from a long-term care need. Long-term care insurance can help pay for nursing home care, assisted living care, as well as a variety of home and community-based care services, such as private duty home care, adult day care, and hospice care [usually covered as a free benefit by Medicare, Medicaid and some private insurance companies may require a co-pay]. You qualify for covered benefits with most plans when you need help with ADLs, or when you need help because you have a severe cognitive impairment. Most policies have a waiting period similar to a deductible. During this "elimination period," you will need to pay for care before your long-term care policy takes effect. The length of the elimination period varies depending on the policy, but as a general rule: the lower your premium, the longer your elimination period. On average, elimination periods vary between 20 and 120 days.
Many people do not want to feel like a burden to their families as their long-term care needs increase. Long-term care insurance can help cover out-of-pocket expenses that could otherwise deplete a person's savings quickly. Additionally, the premiums paid on a long-term care insurance product may be eligible for an income tax deduction, the amount of which depends on the age of the person covered. Benefits paid from a long-term care contract are generally excluded from income.
With long life comes long-term planning. Make a plan for you and your family today. Long-term care insurance may not be for everybody, so if you are considering a policy, read it carefully and be sure to work with an insurance agent who understands long-term care issues.
For more information on long-term care insurance, please contact Ryan Copenhaver Agent, New York Life Insurance Company at 240 409 1154 or email at rcopenhaver@ft.newyorklife.com.