Even if it's difficult to grasp today, there's a strong probability that you'll require assistance caring for yourself in the future. What's most important is how you're going to pay for it. Fortunately, purchasing long-term care insurance is one way to prepare. Long-term care refers to a range of services that are not covered by typical health insurance. This includes help with routine daily activities like getting dressed, taking a shower, or getting in and out of bed.
Here’s what you need to know.
Why Do You Need It?
Many people get long-term care insurance to assist in paying out-of-pocket costs when they are unable to rely on their children or other family members for support. Otherwise, long-term care costs would ultimately exhaust a person's and/or their family's funds.
While long-term care expenses vary by area, they are often quite high. According to research on long-term care published by Genworth, the average annual cost of a private room in a skilled senior community or nursing home in 2020 was $105,850. The average yearly cost of a home health helper is $54,912.
For instance, Medicaid in the US offers assistance to people with low incomes or to those whose savings and investments have been depleted due to healthcare expenses. However, each state has its own regulations and qualifications. In most states, you are allowed to hold aside from your countable assets, which include your checking and savings accounts, CDs, equities, and other investments, up to $2,000 for an individual and $3,000 for a married couple. It’s also important to note that your home, car, possessions, or money for funeral costs are not considered assets.
How Long-Term Care Insurance Works
You must complete an application and respond to health-related questions in order to get long-term care insurance. The insurer may request to review your medical records and conduct a phone or in-person interview with you.
You decide how much coverage you want. The amount paid out each day and over the course of your life is often capped by the plan. Also, you start paying premiums as soon as the insurance is issued and you are granted coverage.
Most long-term care insurance policies allow you to get payments if you are incapable of performing two out of six "activities of daily living," or ADLs, on your own or if you have dementia or another form of cognitive impairment. The everyday life activities include:
● Taking care of incontinence
● Toileting (getting on or off the toilet).
● Basic movement (getting in or out of a bed or a chair).
The insurance provider will evaluate your doctor's medical records when you require care and intend to file a claim, and they could send a nurse to do an assessment. The insurer must approve your treatment plan before authorizing a claim.
Before the insurer begins to reimburse you for any treatment, you often have to pay for long-term care services yourself for a certain period of time, such as 30, 60, or 90 days, which is called the "elimination period."
After you become eligible for benefits and, often, after you have paid treatment for that time period, the insurance policy begins to pay out. Most insurance covers the cost of care up to a daily limit until the lifetime maximum is reached.
Managing The Costs For Long-Term Care Insurance
Finding an insurance plan that fits your needs is the first step in making long-term care plans. It could be possible to add more coverage to a current policy, or you might want a completely different policy.
Your monthly budget should include the premium as well as any co-pays or deductibles that you must pay annually. Considering where your share of the payments will come from is important because long-term care services can be costly. With that in mind, your funding sources might be as follows:
● Investment Income
● Social Security
● Veteran benefits
● Family members