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Long-Term Care, what are the odds?

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 a lengthy illness or disability. It refers to care provided to you at home, in your community, in a nursing home or other residential setting. It can range from help with routine daily activities like eating or dressing to around-the-clock care by skilled medical personnel.

Preparation is the key to financial Security!

Long-term care is a problem that affects not only the patient, but the patient's entire family. Often people don't even begin to plan for long-term care until a need arises. Long-term care needs can occur at any age. Over 40% of the patients currently receiving long-term care are under the age of 65. Most of this care is community and home based. A long-term care policy can prevent work interruptions to care for a disabled or aging family member and may help to avoid draining your financial resources at the expense of your standard of living.

Have you overlooked one of your greatest risks?

Most of us plan carefully for retirement but completely overlook one of the greatest risks we face as we get older, the need for continued care at home or the possibility of a prolonged stay in a nursing home. The fact is, three out of five people over the age of 65 will need some type of long-term care, including home care and community care, at some time in their lives (*). Furthermore, two out of five people will spend time in a nursing home (*). Faced with these realities, we must plan for our continued financial security.

How costly are Long-Term Care services?

Today, the national average cost of nursing home care is $41,000 a year (*). And home care averages $10,000 to $15,000 a year (*). At 5% annual inflation, these costs will double in just 20 years. One lengthy period of long-term care could wipe out everything you've worked a lifetime to build.

Where will the money come from?

Essentially, there are three basic options:

  • Use your own resources. This option is available to those who have the income and assets to pay for long-term care without seriously affecting their financial well-being or independence.

  • Qualify for government assistance. If you meet federal and/or state poverty levels for both income and assets, the government may pay your long-term care bills. However, choices for the care you receive may be limited.

  • Be insured. Long-Term Care Insurance can help you protect your assets and your independence in the event you should face the overwhelming expense of care at some point in the future.

Coverage Options

Long-Term Care Insurance policies are marketed by 100's of different companies and offer a variety of different benefits options. Shown below are some of the benefit options one might find in a policy:

  • Care provided by family and friends at home

  • Care in your community

  • Lifetime Home and Community-Based Care

  • Nursing Home Care

  • Assisted Care Living Facilities

  • Adult Day Care

  • Hospice Care

  • Respite Care

  • Alternate Plan of Care

  • Special Equipment

  • Discounts for spouses and siblings

  • Preferred rates for good health and active lifestyles

Cost of Coverage

The insurance premiums you pay for long-term care coverage can vary dramatically depending on:

  • The insurance company

  • The benefit level you choose

  • The length of coverage

  • The coverage you request

  • The elimination period

  • The area in which you live

It is in your best interest to comparison shop. Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around. Ask your friends, check the yellow pages or call your state insurance department. You can also check our Long-term Care Specialist page to locate a company near you. This will give you an idea of price ranges and tell you which companies or agents have the lowest prices. But don't shop price alone.

The insurer you select should offer both fair prices and excellent service. Quality personal service may cost a bit more, but provides added conveniences, so talk to a number of insurers to get a feeling for the quality of their service. Ask them what they would do to lower your costs and check the financial ratings of the companies.

Sources: HIIAA, Long-Term Care: Knowing the Risk; Paying the Price, 1997; Shelton Consultants, Long-Term Care Planning Guide, 1999