If I have Health Insurance or Medicare, why would I need Long Term Care Insurance?

It might be hard to imagine now, but chances are you’ll need some help taking care of yourself some time in your life. The big question is: How will you pay for it?

Long-Term Care (LTC) insurance is an insurance policy that can be purchased to help cover the costs associated with your healthcare if you have a chronic medical condition, a disability, or a disorder such as Alzheimer’s or other diseases.

Most LTC policies “reimburse” you for the care you receive. Long-Term Care insurance can be used for medical care/assistance provided while you reside in:

• Your home.
• A nursing home.
• An assisted living facility.
• An adult day care center.

When it comes to thinking through your long-term goals and estate planning it is important to consider what your potential long-term care risks and/or costs might be.

Why should anyone purchase Long-Term Care insurance?

Nearly 70% of 65-year-old people will need long-term care services or support, according to 2020 data from the Administration for Community Living, part of the U.S. Department of Health and Human Services. Women typically need care for an average of 3.7 years, while men require it for 2.2 years.

Long Term Care Insurance can be a great tool to use because…

Your regular health insurance does not cover long term care and Medicare WILL NOT come to the rescue.

Medicare is designed to cover only short nursing home stays (like 21 days of rehabilitation) or limited amounts of home health care when you require skilled nursing.

Medicare WILL NOT pay for nursing home/custodial care, which includes supervision and help with day-to-day tasks.

If you do not have LTC insurance, you can receive assistance through Medicaid. Medicaid is the federal and state health insurance program for those with low incomes, but only after you’ve depleted most of your assets and savings.

Why would I want to buy Long-Term Care Insurance?

“To protect your savings.” Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semiprivate nursing home room is $93,072 a year, according to Genworth’s 2020 Cost of Care Survey. Source: Genworth 2020 Cost of Care Survey

“To give more choices for care.” The more money you can spend, the better the quality of care you can get. If you must rely on Medicaid, your choices will be limited to the nursing homes that accept payments from the government program. Medicaid doesn’t pay for assisted living in many states.

Long Term Care (LTC) insurance is a great asset to have. However, a Long-Term Care Policy is NOT the final answer.

LTC insurance is a policy designed to pay a set amount of money per day for a set amount of time or up to a set amount of funds.

• For Example, your LTC benefit may be $175 per day for 3 years or possibly 5 years or $175 a day until $180,000 total is paid out.

NOTE: The current nursing home daily expenses in Alabama range from $231 ($83,950/year) per day for a private room and $219 ($79,931/year)per day for a semiprivate room. Per the “2021 Nursing Home Costs by State & Region” March 4, 2022. https://www.medicaidplanningassistance.org/nursing-home-costs/

If you have a Long-Term Care Insurance Policy in place that should not stop you from planning for Medicaid and protecting the assets you have when the LTC runs out or when the LTC does not cover the average daily rate for the care you need.

NOTE: Medicaid can pay the amount needed to cover the difference in the LTC payment and the nursing home expense.

LTC again is a great tool to have at your disposal. It can be used to pay for in-home care OR assisted living. In most instances, assisted living can be much cheaper than a nursing home. Even so, it is important to begin planning as early as possible in case nursing home care is required later.

“No one plans to go live at a nursing home…but they stay full! It is better to be prepared!”