Understanding Long Term Care Insurance

Extended Health Care or "Long Term Care" is the type of care someone may need when he or she is not able to perform some of the basic activities of daily living such as:

• Eating
• Bathing
• Continence
• Dressing
• Toileting
• Transferring in and out of bed, chair and wheelchair

Long term care needs typically arise from:

• Frailty due to advanced aging
• A debilitating injury
• A progressive illness
• A severe cognitive impairment
• A combination of chronic conditions that degrade a person's health

Care can be provided in a variety of settings depending upon one's needs and plan of care.  It can be in one's home, assisted living facility or a nursing facility and even in a hospice facility.  

Anyone who wishes to prepare for their future medical costs, maintain their independence, and protect their assets from the cost of extended health care.  Those who want to leave a legacy of financial and medical preparedness rather than dependency or poverty.

Public programs:

• Medicare covers just those services that are medically necessary, such as doctor visits, drugs, and hospital stays and it is limited to conditions that are expected to improve, like physical therapy after a fall or stroke.
• Medicaid programs often pay for long term care services, but to qualify for benefits an individual must meet their state's poverty level guidelines.

Private or family support:

• Family members and friends can provide care or funds for long term care needs. But often, the physical, emotional, financial, and daily time requirements can have a significant negative impact on caregivers and their own families. Prior to relying on family or friends, these factors should be taken into consideration and discussed with those involved.

Self-funding:

• You can pay for their long term care costs out of savings, retirement savings or from retirement income.  However, you never know when a health care need may start and you may not have enough time to fully fund your own "self funded" option.  Extended care, even in one's home, is not cheap.  This type of "planning" may be a significant drain on your savings and retirement and it may be prudent to consider including an insurance product in your plan.

Insurance choices include:

• Health Insurance:  May only cover part of the cost for hospital stays, doctor's visits, and prescription drugs, but may not cover the care needed for daily activities related to the need for extended health care.  You should check you Health Insurance policy for details.

• Disability Income Insurance:  Replaces lost income in order to cover basic living expenses such as food, mortgage, rent and clothing, Disability insurance typically ends with retirement or if on claim, at age 65 or 70.

• Critical Illness or Cancer &/or Heart Attack and Stroke Insurance:  While a very popular product in the voluntary employee benefit market, these are too often overlooked for individuals.  These policies pay lump sum benefits at the time of diagnosis to assist in treatment and recovery from covered conditions.  The benefits paid can be used however the policy owner desires.   This type of coverage is not designed for ongoing benefit payments if the need for care lingers. 

• Limited Home Health care insurance: Is designed to pay a scheduled amount per day based on the type of care that a person receives from a licensed medical provider in their home.  A diagnosis of inability to perform 2 or more of the activities of daily living or severe cognitive impairment are required.  Generally much lower premiums than other options, very easy to qualify for and quickly issued.  Benefits are generally payable for up to 365 days.

• Long term care insurance:
  Long term care insurance is designed to protect a portion of a person's assets against health care costs due to long term care needs.  Having the peace of mind knowing that funds will be available to provide for health care and personal wealth preservation in the future is why a long term care policy should be a part of your financial planning.   Up to "lifetime" benefits are available if you are able to qualify and can afford the premiums.    

We will work with you or your other Advisors to find a suitable and affordable solutions to help you plan for and cover some of the costs of extended health care using insurance products.