What is Long Term Care Insurance? – Long Term Care insurance is offered by a handful of insurance companies to address the cost of providing custodial care services in the home or in some form of care facility. Custodial care addresses a disruption in one’s ability to perform daily activities like bathing, dressing, transferring, toileting, etc. without the assistance from another person. Long Term Care also includes supervision due to a cognitive impairment. The most common type of cognitive impairment is Senile Dementia, where an individual needs someone to stay with them to make sure they are safe and secure.
Where health insurance and Medicare cover skilled care which treats conditions to help us get better; long term care insurance provides the coverage in the event conditions are not improving and there is a still a need for assistance. The need for care may result from an accident or injury, but could also be needed due to a medical emergency, an extended illness, or due to general aging.
Most long term care insurance plans are issued to individuals versus group health plans. While individuals could be disabled and need care at any age, it is more common that individuals turn to the policy for benefits during retirement. LTC policies will typically cover services anywhere in the United States, and some provide benefits outside the country as well. Originally, Long Term Care Insurance Plans covered only services provided in nursing homes. Variations in the plans over the past decade have included covered care services in assisted living facilities and services provided in one’s home as well.
Different from Long Term Disability protection which replaces income if you are disabled and unable to work, Long Term Care insurance covers the additional cost associated with needing care. While the cost of care varies across the country, in more metropolitan areas the cost for a one month stay in a nursing home can easily be over $8,000 per month. Home care is often a more affordable option for individuals who only require a mild to moderate level of assistance.
With the cost of care so high, long term care insurance can play a vital role in preserving assets and the financial health and physical health of spouses and other family members. Plans pay a selected amount towards the cost of care up to a specific policy limit elected by the individual. Plans can also include annual increases to benefits to address inflation, however this does add to the cost of the coverage.
Want to learn about the types of plans available to pay for services, the major players in the marketplace, and the key questions to ask when determining if you need it? Tune in to next month’s article for details.
David Hillelsohn, founder of DHill Financial, has been a Long Term Care Insurance specialist for 26 years. David can be reached at (703) 435-6028 or david @dhillfinancial.com with questions about this content.