How to Plan for Long-Term Care That Won’t Drain Your Assets
For an aging generation, long-term care is becoming an important consideration. Activities that were once completed with ease may become increasingly challenging over time and may eventually require assistance. This type of physical or mental decompensation can be due to age, illness or even injury. Whatever the reason, a helping hand becomes a vital part of completing activities of daily living. Activities that were once routine such as bathing, getting dressed and functional movements like getting out of bed, may become downright impossible. Losing independence is difficult for many to come to terms with, but that does not mean that you should avoid planning for the possibility of it happening to you or your loved ones.
Without a long-term care insurance policy, home health aides, assisted living facilities and nursing homes can exceed your budget. Finding a facility or program that you can trust is stressful enough without factoring in how much it will cost.
What is Long-Term Care Insurance?
Long-term care insurance is not just for an aging generation. In preparation for prolonged illnesses, unforeseen disability or cognitive impairment requiring long-term care, long-term care insurance can be a financial asset for you and your family. When activities of daily living become challenging to complete, it is very difficult to lead a productive life. Whether care is provided in the home, or a community or private facility, a long-term insurance plan can help cover those expenses.
Are There Specific Requirements Needed for Long-Term Care Insurance?
A medical professional, often in conjunction with a social worker, will determine if you are capable of completing your activities of everyday living. These are basic activities such as bathing, continence, dressing, eating, toileting and transferring. If you are unable to complete a certain number of these activities (usually 2) for 90 days or more without any assistance, then you may be eligible for long-term care policy benefits. You might also qualify for benefits if a medical professional certifies that you are cognitively impaired.
Who Qualifies for Long-Term Care Insurance?
It is better to purchase a policy in the younger years of your adult life while you are still in good health. This will help keep your premiums lower. Policies typically cover hospice care, adult day centers, nursing homes, respite care, residential care facilities and in-home care such as skilled nursing care or occupational therapy.
But just because you qualify, does that mean you should immediately purchase a plan? If you have a limited income and resources, then you should inquire if Medicaid will cover the cost of care. On the other hand, if you are wealthy and have a large nest egg, you may feel confident enough to have plenty of savings in the event that you do need long term care in the future. But, like many Americans, if you’re left somewhere in the middle, a long-term care insurance policy is likely the best option. This can allow you to secure assets for your heirs, spare them a large portion of the physical and financial burdens of your care, and enhance your chances of getting your personal choices of care met.
What is a Benefit Trigger?
A “Benefit Trigger” is the way you claim benefits on your policy. All LTCi policies have 2 triggers: the inability to perform at least 2 of the Activities of Daily Living for at least 90 days, and/or cognitive impairment. Some examples of a cognitive impairment would be Alzheimers disease, senile dementia or Lewy Body Dementia. Once you have been assessed and approved, a medical professional will design a Plan of Care which the insurance company will use to determine your benefit level.
What is an Elimination Period?
An “Elimination period” is a span of time in which the insured qualifies for care but pays for the cost of care out of pocket. This is very similar to how a deductible works. Typically, policies offer elimination periods of 30, 60 or 90 days. After the elimination period ends, then your benefits will kick in as long as you meet the benefit triggers and you’re receiving qualified care.
What Does a Long-Term Care Insurance Policy Cost?
There is no “One Size Fits All” long-term care insurance policy. There are many factors that go into deciding a particular rate. Rates are determined based on your age at the time of purchase, current health status, the amount that a policy will pay per day or per month and the span of time that a policy will pay. Each client needs to determine the policy structure that works best for them, their family and their budget.