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Frequently Asked Questions About Long Term Care Insurance Print E-mail

Q1: What is Long Term Care?
A: Long Term Care is personal or custodial assistance provided to people who have difficulty caring for themselves or can no longer care for themselves due to an accident, disability, prolonged illness or aging.
Source: What is Long Term Care? National Clearinghouse for Long Term Care Information.
Q2: What does "custodial care" mean?
A: Custodial care is assistance given by non medical personnel to individuals who need help performing their activities of daily living (ADLs). Examples of custodial care include walking and getting out of a chair or bed, assistance in bathing, dressing, feeding, toileting, or supervising the administration of medications.
Q3: Where is Long Term Care provided?
A: Long Term Care is provided in many different settings. Most care is provided at the care recipient’s or family member’s home or in the community (e.g., adult day care centers). Once a person can no longer live at home, he / she may receive Long Term Care in an assisted living facility home, an Alzheimer’s facility or a skilled nursing home.
Source: National Clearinghouse for Long Term Care Information.


Q4: Who will need Long Term Care?
A: If you are under 65, there is a chance you will need Long Term Care. Forty percent of Americans currently receiving Long Term Care are between the ages of 18 and 64. (1)
For those over 65, the likelihood that you will need some type of custodial care rises to 70 percent.(1) It is estimated that people over 65 face a 40 percent lifetime risk of eventually needing skilled nursing home care of some duration. (1)
Source: (1) U.S. Department of Health and Human Services National Clearinghouse for Long Term Care Information, 10/22/08

Q5: Is Long Term Care just for the elderly or people over 65?
A: No. An illness, accident or degenerative condition can happen to anyone at any age. In fact, forty percent of Americans receiving Long Term Care are between the ages of 18 and 64. (1) Consider that by age 65, many Americans will have a chronic disease and may not qualify for Long Term Care coverage if they wait. Therefore, Long Term Care insurance should be a component of everyone’s financial portfolio.
Source: (1) U.S. Department of Health and Human Services National Clearinghouse for Long Term Care Information, 10/22/08


Q6: What are some typical costs for Long Term Care services?
A: The average costs for Long Term Care services can be staggering without insurance. Although costs vary by state, the national average for a private room in a skilled nursing home is $77,745. (1) Expect to pay an average $20 per hour for a home health aide, which can total $52,000 year (40 hours per week). (1) At a minimum, these costs are expected to double over the next fifteen years.
Source: (1) Genworth Financial: 2011 Cost of Care Survey. (National average hourly cost for home health aide is based on three provider types: Medicare Certified Agencies, Non-certified and Licensed Agencies, and Non-certified and Unlicensed agencies.)
Q7: Who pays for the cost of Long Term Care services?
A: You do. Traditional medical insurance, Medicare and Medicare supplements do not pay for Long Term Care services. They are designed to pay for short-term skilled rehabilitation services. On average, Medicare pays for about 20 days of nursing home rehabilitation and a limited amount of home care. Consequently, paying for your own Long Term Care is your responsibility.
Q8: How can I pay for Long Term Care services?
A: There are basically three options. First, you pay for your Long Term Care out of your own pocket, or family members will pay. Second, you can apply for welfare assistance through Medicaid once you spend down your income and assets to poverty levels. The third option is to purchase a Long Term Care insurance policy, which provides the most choices for your future needs.


Q9: Why is there so much new information about Long Term Care from the government, American Association of Retired Persons (AARP), state governors and other major media outlets?
A: We are facing massive deficits in Social Security, Medicare and Medicaid programs. Consequently, the Federal government has recognized it will not be able to support the health care and Long Term Care needs of the 60+ million Baby Boomers entering retirement over the next few decades.
The government, non-profit organizations and private business sectors are joining together to educate the public about this Long Term Care crisis so people can make informed decisions and prepare for the future.
Source: Meeting the Long Term Care Needs of Baby Boomers. The Urban Institute Retirement Project
Q10: What is the government doing to address Long Term Care issues?
A: The government, both state and federal, is sending a strong message that it will not pay for Long Term Care for most Americans. The most recent example is the passage of the Deficit Reduction Act, which tightened the rules to qualify for Long Term Care assistance through Medicaid, the government welfare program.
Additionally, Congress has funded the Own Your Future informational campaign about Long Term Care, has passed some tax incentives for those who purchase LTC insurance, and it is encouraging more “LTC Partnership” plans.
Source: U.S. Department of Health and Human Services – Administration on Aging
Source: Own Your Future. Campaign – Overview
Q11: I’ve heard about the Own Your Future campaign. What is it?
A: It’s a state and federal government campaign designed to increase awareness about the need to plan for Long Term Care. Households with members between ages 45 and 70 are targeted to receive informational materials, including a Long Term Care Planning Kit and state-specific resources.
Source: U.S. Department of Health and Human Services – Administration on Aging
Source: Own Your Future. Campaign – Overview
Q12: What is the Deficit Reduction Act?
A: The Deficit Reduction Act (DRA), signed into law February 2006, reduces the government’s financial burden of medical health and Long Term Care coverage by employing more rigid requirements to qualify for Long Term Care assistance paid for by Medicaid. Basically, the DRA mandates all but the poorest populations in America to pay for their own Long Term Care.
Q13: Will Medicare cover my Long Term Care needs?
A: Neither Medicare nor Medicare Supplemental Plans cover Long Term Care. These plans only pay for skilled medical rehabilitation in a nursing home over a limited period of time (typically 3 – 4 weeks) after a hospital stay. They do not pay for custodial or intermediate care in that nursing home environment, nor do they pay for extended home care. The Social Security Administration, "Medicare does not pay for Long Term Care, so you may want to consider options for private insurance."
Source: Social Security Administration Form: SSA-7005-SM-SI (1/08)
Q14: Does Medicare cover my rehabilitation and Long Term Care should I need them?
A: Medicare may cover up to 100 days of medical rehabilitation in a skilled nursing home if your physician prescribes it. On average, Medicare pays between 3-4 weeks of rehabilitation in a nursing home. However, Medicare will not cover your long-term personal and custodial care.
Q15: Doesn’t Medicaid cover Long Term Care needs?
A: Medicaid, a state/federal welfare program, provides benefits covering nursing home care and limited home care ONLY after your personal assets have been depleted. You can view a data table of how much each state allows people receiving Medicaid benefits to keep.
Q16: Why can’t I use Medicaid to pay for my Long Term Care?
A: You can, but there’s a huge downside to relying on Medicaid. Medicaid is a state/ federal welfare program. Consequently, to qualify for Medicaid, you must have: (1) depleted most of your assets; (2) directed most of your income toward your care; and (3) require nursing home level services.
Steven Moses, President of the Center for Long Term Care Financing, stated in the Senior Market Advisor, April 2004, "Medicaid is a means tested public assistance program. It has a dismal reputation for lack of access, low quality, low reimbursement rates, discrimination and institutional bias."


Q17: Who should consider Long Term Care Insurance?
A: All adults, especially those over 40, should consider purchasing Long Term Care insurance. The need for Long Term Care insurance can arise anytime due to illness or accident. As we age, the need for some type of Long Term Care increases.
Suze Orman, a nationally acclaimed personal finance expert, states, "No well-planned retirement should be without Long Term Care insurance. It is the very cornerstone of retirement security."
Q18: How can I convince my aging parents to consider Long–Term Care insurance?
A: Discussing Long Term Care is difficult for both adult children and their parents. Waiting until a parent is ill or becomes frail due to an accident causes even more stress, so it’s important to begin the conversation early.
First, listen to your parents’ concerns. Most likely, they will tell you they do not want to be a burden. Outline the many choices available, including home health care, assisted living, Alzheimer’s facilities, and nursing homes. Become familiar with and discuss the high costs associated with Long Term Care.
Then, listen to and respect your parents’ preferences. Don’t forget to discuss your own concerns about providing care for your parents. Be open and honest about your ability and willingness to take care of their future physical, emotional, and financial needs.
Be realistic and understand that providing care for a loved one takes a toll on the entire family. Most caregivers report a decline in their own health, including depression, an increased use of medications, lost wages, and less time spent with their spouse, children and friends.
Last, help your parents create a Long Term Care plan that meets everyone’s needs and desires. Suggest Long Term Care insurance as a way to provide the care your parents deserve.
Q19: How do I determine my own need for Long Term Care insurance?
A: If you were to suffer a debilitating accident or illness, think about how long you could pay for your own Long Term Care. Consider how the loss of your savings and retirement funds will impact your family’s quality of life.
When you think about spending your well-earned money on costly Long Term Care services, you can see the financial and emotional hardship your family will suffer. Consequently, the sooner you have Long Term Care coverage, the better. Long Term Care insurance provides peace-of-mind that your family will not suffer should your need for extended care arise.
Q20: Does it make sense to wait until I am older before I apply for coverage?
A: It doesn’t usually pay to wait. The cost of your premium is age-based, so the younger you are, the more affordable your rate. You also have a greater chance of being approved when you are young because you fall into a more favorable risk class. Also, consider that premium rate tables for new applicants increase every three or four years. Even a five-year wait may double the cost of coverage. The most important reason to act sooner rather than later, however, deals with your ability to qualify medically.
Source: National Health Administrators
Q21: Does my health insurance cover any Long Term Care I might eventually need?
A: No. Just as with Medicare, your medical insurance covers short-term, acute medical needs, hospital stays, and costs relating to immediate recovery. It will not pay for extended Long Term Care.
Source: Does My Private Health Insurance or Health Maintenance Organization (HMO) Pay for Long Term Care?
Q22: I have disability insurance. Will it cover my Long Term Care expenses
A: No. Disability insurance provides income replacement; it will not cover your Long Term Care needs.
Source: National Health Administrators


Q23: What services are covered by Long Term Care insurance?
A: Depending on the type of plan purchased, Long Term Care insurance covers many skilled and custodial services in a variety of settings, including in-home skilled and custodial care; adult day care; assisted living facilities; nursing home care and Alzheimer’s centers.
Source: A Shopper’s Guide To Long Term Care Insurance, The National Association of Insurance Commissioners


Q24: How can Long Term Care insurance help?
A: Long Term Care insurance coverage gives you peace–of-mind because the policy benefits help you remain in your home and retain your independence. In addition, you will be able to choose quality care in the setting you prefer, avoid burdening your family with difficult care giving tasks, protect your assets and preserve your estate.
Q25: What is the financial risk if I do not have Long Term Care insurance?
A: You risk depleting your savings, retirement pension and other assets. Additionally, your loved ones may be responsible for providing your Long Term Care needs, which can take a toll on them emotionally, physically, and financially.
Q26: How do I lessen the Long Term Care burden for my family?
A: Realize that by not taking responsibility for your own Long Term Care needs, your family or loved ones will eventually be forced to provide for your physical, emotional and, possibly, financial well-being. If you or your family is unable to pay for your Long Term Care services, then you will have to rely on Medicaid or other government sponsored assistance. Better to plan now before you need extended care services; don’t wait for a medical crisis or until you are older. Explore the type of Long Term Care services available and the high costs associated with them.
Consider purchasing Long Term Care insurance to meet your future needs and to eliminate the severe emotional toll care giving for a loved one often causes.


Q27: How do I make the right decision regarding Long Term Care insurance?
A: Work with a Long Term Care Specialist. Specialists have access to a variety of plans and will help you design one that meets your specific needs. They consider many factors, including your current health, your financial situation and your budget.
Source: National Health Administrators
Q28: How do I qualify for Long Term Care insurance?
A: Your medical history and current health status determines whether you qualify for Long Term Care insurance. In addition, when you apply you must be able to perform all of your activities of daily living (ADLs) which include bathing, dressing, eating, toileting and moving from place-to-place.
Source: National Health Administrators
Q29: What do I need to consider when shopping for Long Term Care insurance?
A: Work with an agent who specializes in Long Term Care insurance. Select a policy from a financially stable insurance company. Purchase as much coverage as your budget allows when you first apply, but carefully weigh the value of adding riders and options that may not be worth the additional cost. Because the cost of Long Term Care will increase in the future, consider purchasing compound inflation protection. Read this article for more information on what to look for in a good long-term care insurance policy.
Source: National Health Administrators


Q30: How much coverage do I need?
A: Consider the following factors to determine an appropriate level of coverage: (1) the cost of care in your area; (2) the amount of personal assets you need to protect, including Social Security, pension income and investments; (3) the amount of money you are willing to spend out-of-pocket for your Long Term Care needs; and (4) your current budget for an insurance plan.
Source: National Health Administrators
Q31: How much does Long Term Care insurance cost?
A: Premiums are based on your age, health status, and the level of coverage you select at the time of application. You can find more information by reading this article about the cost of Long Term care insurance policies.
Source: National Health Administrators
Q32: Can my policy be canceled and will my premium rate increase?
A: Your policy cannot be canceled assuming you pay your premiums on time. Companies cannot increase your rates based on your filing a claim or due to a change in your age or health status. It is, however, the right of all insurance companies to raise rates upon approval by state insurance departments. Any approved rates must be spread across an entire group or class.
Source: A Shopper’s Guide To Long Term Care Insurance, The National Association of Insurance Commissioners

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