Most people do not plan for or do not think they will need long-term care. However, 70% of people turning age 65 can expect to use some form of long-term care during their lives, according to the U.S. Department of Health and Human Services. Most people believe that they can save enough on their own to cover the costs. This can be very expensive and may endanger your retirement or other savings. Planning ahead for long-term care has real benefits for you and your loved ones.
Long-term Care
Long term care consists of a range of services to meet personal care needs to assist with the tasks of everyday life. There are 6 Activities of Daily Living, or ADLs, these include: eating, bathing, dressing, toileting, continence, and transferring (ability to get out of bed/chair). In general if you can’t do 2 or more of these activities, or if you have cognitive impairment, you will most likely need long-term care. Long-term care is not always long, depending on your situation, and can be provided at home as well as at nursing homes or assisted living centers. Assistance with ADLs is often referred to as “custodial care”.
Acute or Skilled Care
Acute care, also known as skilled care, consists of medical, nursing, or rehabilitative services, including help taking medicine, undergoing tests (IV’s, blood pressure, etc.), or other similar services. This care is generally performed by licensed nursing personnel and certified nursing assistants.
Why is the distinction between the two important? Medicare and most private health insurance companies pay only for skilled care and not custodial or long-term care.
Who Needs Long-Term Care Insurance?
Old age, mental or physical illness, injury, and living arrangements are all factors in determining if you will need long-term care services and if long-term care insurance will benefit you. As stated earlier, 70% of people turning age 65 can expect to use some form of long-term care during their lives, meaning it’s likely that either you or your spouse will need some ADL assistance. Since Medicare does not pay for the cost of long-term care, and private health insurance companies rarely do, it is important to determine if you will need to buy long-term care insurance. You might not need to buy long-term care insurance if you will qualify for Medicaid or if you plan on having enough money to pay out of pocket, when you expect to need long-term care services.
Will I Qualify for Medicaid When I need It?
Medicaid is a joint federal and state government program that helps people with low income and assets pay for some or all of their health care bills, including long-term care services or custodial care in nursing homes and at home. To be eligible for Medicaid you must meet certain requirements, and eligibility rules and services that are covered vary from state to state. Medicaid is most often provided to aged or disabled persons with income that is below 100 percent of the federal poverty line. Your State Medical Assistance office is the best source for information about how to qualify for Medicaid in your state and if you qualify for long-term care services. If you expect to have very little money when you need long-term care services than you probably will not need to buy long-term care insurance. Buying long-term care insurance would only save the state, not you, money.
Costs of Paying out of Pocket
On the other hand, if you expect to have a lot of money when you need long-term care services; you also will probably not need to buy long-term care insurance. According to Forbes, if your net worth is in the $1.5-$2 million range than you could safely skip buying long-term care insurance. Any services needed can be paid out of pocket in this situation. Another option would be to self-insure for long-term care costs by starting a savings (beyond regular retirement living expenses) that can be used for care or otherwise will go to heirs. However, this option requires planning ahead and the discipline to put extra money aside every month for years.
However, if you fall between these two categories, owning long-term care insurance offers peace-of-mind benefits as well as financial ones. Long-term care can be very expensive, and without assistance or savings paying for long-term care services can be a daunting thought. Protect you and your family by thinking ahead and planning for long-term care services. For more information on long-term care insurance or to find out more about our services, contact TJ Woods Insurance Agency today.
