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Planning for Long Term Care

Is long-term care insurance right for you or your loved ones?


The commonwealth of Pennsylvania is encouraging its residents to think about that as they prepare for a marketing blitz this spring to help people understand what long-term care insurance is and how it can benefit you. Long-term care insurance has often been poorly understood by the general public because of its complexity. 


The impetus for the state-wide campaign in Pennsylvania is primarily due to financial reasons.  According to the state Department of Public Welfare, Pennsylvania is expected to see a 22.8 percent rise in Medicaid spending, which is expected to reach $1.1 billion by the end of fiscal year 2009.


According to AARP, long-term care refers to the many services beyond medical care and nursing care used by people who have disabilities or chronic (long-lasting) illnesses. Long-term care insurance helps you pay for these services, which can sometimes be very expensive.  A long-term care insurance policy ensures that you can make your own choices about what long-term care services you receive and where you receive them.


Well, you may ask, what about health insurance? Doesn’t that cover these services?  Health insurance doesn't always pay for long-term care services and the government provides limited coverage through Medicare and Medicaid.


Long-term care insurance pays for skilled care and covers help with activities of daily living.  In some states, long-term-care insurance policies can also provide payouts for home modifications.


For some people, it can be an affordable way to protect against the risk of having to use your savings to pay for long-term care, and covers services in a variety of settings.


Long-term care insurance typically covers the cost of:


  • Help in your home with daily activities like bathing, dressing, eating and cleaning.
  • Community programs, such as adult day care.
  • Assisted living services that are provided in a special residential setting other than your own home. These services may include meals, health monitoring, and help with daily activities.
  • Visiting nurses.
  • Care in a nursing home.


AARP recommends that you consider each of these issues before deciding whether long-term care insurance is for you:


  • Coverage. You can choose long-term care policies that pay only for nursing home care or only for home care. Or, you can opt to purchase coverage for a mixture of care options that includes nursing home, assisted living, and adult day care. Some will pay for a family member or friend to care for you in your home.


  • Daily or Monthly Benefit. The daily or monthly benefit is the amount of money the insurance company will pay for each day or month you are covered by a long-term care policy. If the cost of care is more than your daily or monthly benefit, you will need to pay the balance out of your own pocket.


  • Benefit Period. Your benefit period determines the length of time you will receive benefits from your policy. You can choose a benefit period that spans from two to six years, or the rest of your life.


  • Elimination or Waiting Period. During this period, you must pay all of your long-term care expenses out of your own pocket. This period could last anywhere from 0 to 100 days. The longer the waiting period is, the lower your premiums will be.


  • Inflation Protection. With health care costs rising to new heights every year, buying a policy without inflation protection is probably buying a policy that won't cover much of your expenses. There are two main kinds of inflation protection: the right to add coverage at a later date; and automatic coverage increases.


  • Non-Forfeiture Benefit. Policies with this benefit will continue to pay for your care even if you stop paying premiums. This policy feature can add 10 percent to 100 percent to your premium.


Finally, for those who wish to continue living comfortably and independently as they age, check with the insurance provider on whether they will pay for home modifications.


To learn more about long-term care insurance, the U.S. Department of Health and Human Services has created the National Clearinghouse for Long-Term Care Information website to provide consumers with more information and resources to help you and your family plan for future long-term care needs.


By Harry Burns, CAPS


Harry Burns, a Certified Aging-in-Place specialist, is founder of Home Evolutions LLC (http://www.homeevolutions.com/) which provides customized, high-quality building and remodeling services for people with disabilities and older adults wishing to maintain their independence.  His company specializes in assessment, modification, design/build and maintenance services.

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