The major differences between regular health care insurance and long-term care insurance are significant. Most people have had many health issues covered by regular health care during their lifetimes. For the most part, these issues do not last long and are resolved with routine medical care. But long-term care deals with health issues which often, but not always, occur later in life and require extended care which may last months or even years.
What Services Does Long-Term Care Provide?
Long-term care differs from regular health care because it is designed to support and meet personal care needs rather than medical needs. It provides services which assist people with basic, everyday tasks related to personal care. These include things such as eating, bathing, caring for bladder and bowel control when a person is unable to control these things, dealing with personal hygiene needs related to the use of colostomy bags or catheters, using the toilet, or dressing. All these daily living activities may be difficult to accomplish for those who have become physically or mentally disabled.
Types of Assistance to Consider
Other specific needs which people may have over the long term include assistance with everyday tasks. These include instrumental activities such as taking medication, managing money, doing housework, preparing meals and cleaning up afterwards, caring for pets, using communication devices and telephones, purchasing groceries or shopping for clothing, responding to emergency alerts including fire alarms, tornado watches or warnings, or calling for police help.
What are the Crucial Ages for Long-Term Care?
The most recent research indicates that by the time most Americans reach the age of 65 they will need some long-term care in the future. As people age, it becomes more likely that they will need this type of care. Women tend to live longer than men by an average of five years and tend to live alone when older. Chronic illness or accidents also contribute to disabilities which will cause people to need long-term care. On average, people between ages 40 to 50 with disabilities could need this type of care. By the time people reach the age of 90, 69% have a disability.
What About Public Programs?
Public programs such as Medicare and Medicaid do not cover everything within the realm of long-term care. Medicare only pays for it when a patient needs skilled services or rehabilitative care. Medicare only covers stays in a nursing home up to 100 days, but the average coverage length is only 22 days. If a patient is at home, Medicare covers these services for an even shorter time and doesn’t pay for the non-skilled assistance with everyday activities which most people need. Medicaid only pays for long-term care services for those whose income is below a certain level. In addition, each state has requirements which patients must meet in order to be eligible for Medicaid to pay for this type of care. Other Federal programs such as the Department of Veterans Affairs and the Older Americans Act pay only in certain circumstances and for specific populations.
Paying for Long-Term Care Services
There are many ways to pay for the services long-term care provides. For this reason, costs vary widely for services. People often use a combination of options to pay for their care, including their savings, personal income, annuities, life insurance, reverse mortgages and long-term care insurance.
Calculating the Expense of Long-Term Care
Long-term care insurance is expensive. The average annual premium for a couple 60 years old is about $3,490. This will cover $150 per day for up to three years, with a 90-day elimination period (the time when you must cover costs on your own until the policy begins coverage). If you wait until you are 65 years old, the average costs increase by about 34%, so your annual premium may increase to about $4,675. If you buy your policy younger and you are in better health, your premiums will be lower. Policies vary in the benefits they pay, and the waiting/elimination period required. Some have no elimination period and some provide inflation protection.
Your age at the time you purchase a policy determines its cost, and the benefits it will pay. There is a maximum amount your policy will pay over your lifetime and it is calculated with a special formula. You may not be able to quality for long-term care insurance if you are already receiving these types of services or if your health is poor.
National Average Costs for Long-Term Care
- In a nursing facility, semi-private rooms cost about $200 to $230 per day or $6,845 per month.
- In a nursing facility, private rooms cost about $250 per day or $7,700 per month.
- Assisted living facilities vary in unit costs based on the number of bedrooms. A unit with one will cost about $120 per day or about $3,650 per month.
- At-home aides for health issues cost about $20.00 per hour.
- Help with housekeeping costs about $15 to $25 per hour.
- Adult day health care center services cost about $70 per day.
The duration and type of care you need affects the costs of care. Where you live and what provider you use also affect the costs of care. If you live at home, care scheduled on holidays, on weekends, and at night are more expensive. Facilities often charge extra for services which are not basic to housekeeping, and room and board. Extra costs are often added for special events or activities.
New Products to Consider
Some life insurance companies offer new combined products such as Life/Long-Term Care insurance. This is a life insurance policy which will pay benefits to either long-term care or regular life insurance benefits, depending upon need. Other companies are offering tax-free advances on life-insurance death benefits while the policy holder is still alive. These are called Accelerated Death Benefits and generally provide cash advances for people who are terminally ill, who have a diagnosis of life-threatening illness, who are permanently confined in a nursing home and unable to perform daily living activities, or when needing an extended amount of time for long-term care services.
Since new products are being created as more Americans age, it can be helpful to periodically check with the American Association for Long-Term Care Insurance for the latest information.