With people living longer than ever before, more seniors require long-term healthcare services in nursing homes and assisted living facilities. However, such care is extremely expensive, especially when it’s needed for extended periods.
Traditional healthcare insurance doesn’t cover such services, and though Medicare does pay for some long-term care, it's quite limited. To address this gap in coverage, long-term care insurance was created.
Long-term care insurance was introduced in the 1980s and designed to cover expenses associated with long-term skilled nursing services delivered in a nursing home, assisted living facility, or other senior care setting, with some policies covering care delivered in your own home.
Such intensive care is required when you are no longer able to care for yourself. These policies cover the cost of skilled nursing services that support you with basic self-care tasks known as activities of daily living (ADLs), such as bathing, feeding, and using the bathroom.
Before your coverage begins, most policies require that you demonstrate you have lost the ability to engage in at least two or three ADLs. Most policies also have a deductible, or elimination period, before you are eligible for benefits.
Additionally, long-term care policies typically come with a predetermined benefit period, such as three to five years of coverage, and a cap on the dollar amount of daily coverage.
Obviously, the younger and healthier you are when you buy the policy, the lower the premiums will be, so the sooner you invest in coverage, the better. Most policies exclude certain pre-existing conditions, such as if you already need help with ADLs, you have AIDS or AIDS-Related Complex (ARC) or Alzheimer’s Disease or any form of dementia or cognitive dysfunction, just to name a few.
Increasing Premiums, Decreasing Benefits
With the elderly population booming, there has been a surge in demand for long-term care services, which has led to a marked increase in the cost of such policies. At the same time, many insurers have been cutting back on the benefits their policies offer.
If you are looking to purchase long-term care insurance, you should speak with multiple insurance providers and compare their benefits, care options, and premiums. Always ask about the insurance company’s history of rate increases.
When meeting with an insurance provider, you must get answers to following three questions about your policy:
- How long is the elimination period before the policy begins paying benefits?
- What capacities, or ADLs, must you lose before coverage kicks in?
- How many years of care are covered?
Buying long-term care insurance, like estate planning in general, should be a family affair, because you are going to need your family members to advocate for you and file a claim for the policy when you need to use it. Given this, make sure your family knows what kind of policy you have, who your agent is, and how to make a claim.
You should pre-authorize the right person to speak to the insurance company on your behalf, and not just rely on a power of attorney. That said, you should definitely have a well-drafted, updated, and regularly reviewed power of attorney on file as well.
Keep Your Policy Updated
Once you are in your 40s, your long-term care policy should be reviewed annually to evaluate new insurance products on the market and update your policy based on your changing needs.
Long-term care insurance can be one of many effective tools in a well, designed estate plan to take care of you and those you love.
Lasca Arnold Pendley, focuses on Estate Planning and Probate Law in Boerne, to help you make informed decisions about life and death, for you and the people you love.