Frequently Asked Questions about Long-term Care
Why Are Long-Term Care Services Important?
Will Medicare pay all the nursing home costs for seniors and those who are disabled?
What options are available to finance long-term care?
Should I buy long-term care insurance?
What should I keep in mind when considering a long-term insurance policy?
What should be included in my long-term care policy?
Can the insurance company increase the policy's premium before I need it?
What is long-term care?
Long-term care is the kind of help you need if you are unable to care for yourself because of prolonged illness or disability. It can range from help with daily activities at home, such as bathing and dressing, to skilled nursing care in a nursing home.
Why Are Long-Term Care Services Important?
Long-term care refers to a broad range of medical, personal, and social services needed by people who are unable to meet their basic living needs for an extended period of time. Such conditions include the inability to move about, dress, bathe, eat, use a toilet and/or safely take medications. Help may also be needed with household cleaning, preparing meals, shopping, paying bills, visiting the doctor, or answering the phone. Long-term care disabilities can be due to the cumulative effects of aging, as well as cognitive or physical impairment from accident, stroke, depression, dementia, Alzheimer's disease, Parkinson's disease, etc.
Will Medicare cover all the nursing home costs for seniors and the disabled?
No. Medicare, a federal health insurance program for disabled adults and adults age 65 and older, has specific rules that apply for payment of nursing home care. First, Medicare requires a 3-day hospital stay prior to transfer to a nursing home and after admission to the nursing facility, services provided in the nursing home must relate to the illness or injury that cause the hospitalization. After admission, Medicare coverage for nursing home care terminates once an individual's needs change from skilled care to custodial care. Finally, Medicare coverage is limited to 100 days of care per benefit period. A Medicare beneficiarys average-length-stay in a nursing facility is about 31 days per benefit period as a result of these rules. Medicare does not pay for nursing home custodial care over an extended period of time.
What options are available to finance long-term care?
- A private health insurance or retirement health plan.
- An individual's own income, savings or sale of other assets.
- Relying on children or relatives to provide care on an informal basis.
- Medicaid, a public medical assistance program for people with low-income and limited financial resources.
- Medicare, a federal health insurance program for disabled adults and adults age 65 and older.
Should I buy long-term care insurance?
For some, a long-term care policy is an affordable and attractive form of insurance. Buying a long-term care policy should not cause financial hardship and make you forego other financial needs. Each person should carefully examine his or her needs and resources to decide whether long-term care insurance is appropriate. It is also a good idea to discuss this purchase with your family.
What should I keep in mind when considering a long-term care insurance policy?
While there are a number of factors that can be evaluated when deciding the best policy to buy, some of the things that should be considered are:
- Long-term care insurance isn't for everyone. If you are currently receiving Social Security or expect to have minimal or no retirement savings, you will likely qualify for state aid and should not purchase long-term care insurance.
- Research individual insurance companies to see whether they have a history of raising rates for long-term care coverage. Check with your state insurance department to learn how your state regulates rate increases.
- Check with your financial advisor or accountant for guidance on whether long-term care insurance is appropriate for your specific financial situation. If long-term care insurance is for you, shop around for the most appropriate coverage at the best price.
- Make sure you understand what a long-term care insurance policy covers and just as importantly, what it doesn't. Ask questions and make sure the company is reputable and licensed to sell insurance in your state. If you have concerns about a company, contact the State of Missouri Consumer Insurance Hotline, 1-800-726-7390.
- Pre-existing conditions, conditions that you have before you apply for the insurance coverage, may be excluded from coverage. In addition, for some policies, age 60 is a trigger for a rate increase. Thus, it may be beneficial to purchase your policy before your late 50's.
- Don't rely on Medicare or Medicaid to cover your long-term care needs. Medicare will usually pay for a small percentage of nursing home costs. Medicaid pays for long-term care services but only if you meet federal poverty guidelines, and the choice of care facilities can be very limited.
- Keep in mind that tax breaks are available for qualified long-term care insurance policy premiums. The benefit payments received under such policies are tax-free.
- Do not divulge personal financial or medical information over the phone, such as your social security number, your health status, your Medicare status or your private insurance coverage. Don’t be fooled by mailings about long-term care insurance that appear to be from an official government source. If you are concerned that someone is trying to trick you, contact your state insurance department.
- Be wary of advertising that suggests Medicare is associated with a long-term care policy. Medicare does not endorse nor sell long-term care insurance.
What should be included in my policy?
- An "outline of coverage" that clearly describes the policy's benefits, terms and limitations in detail. It is important to understand how much money the policy would pay, and how much the policyholder would be responsible for out-of-pocket.
- A clear description of the elimination period. Some policies have a set number of days that must be spent in a nursing home or in claims status before the long-term care insurance coverage kicks in.
- At least one year of nursing home or home healthcare coverage or both, including intermediate and custodial care.
- The right to cancel the policy for any reason within 30 days of purchase and receive a full premium refund.
- A guarantee that the policy cannot be canceled or terminated because of the policyholder’s age or physical or mental health condition.
- Consider an inflation protection option that periodically increases the benefit level without the need for the policyholder to provide evidence of insurability.
Can the insruance company increase the policy's premium before I need it?
There have been a number of measures taken to discourage long-term care insurance companies from under-pricing long-term care insurance policies. One of those new requirements is for companies to disclose to prospective buyers their history of premium increases. This is one of the things you should look at in deciding which policy to buy. A person needs to decide what product options best suit his/her needs and select the policy designed to provide the level of protection needed. The cheapest policy is not necessarily the best policy.
Why plan now?
Long-term care services will be a major issue for the parents of baby boomers who are now in their 70’s and 80’s and who will likely face many of the issues mentioned previously. Further, baby boomers will need to plan for their own long-term care needs as well.
Key points to consider when planning for your future:
- Communicate with family and friends.
- Compare and understand long-term care insurance options.
- Decide who you can count on for help.
- Establish clear legal directions.
- Focus on your finances.
- Learn what your community has to offer.
- Make necessary home improvements.
- Take control of your health and personal needs.
- Refer to the links and resources page within this site.
