Long-Term Care Insurance: Is It for You?

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by Advice Chaser
by Advice Chaser
woman standing next to woman riding wheelchair

Whether you have a chronic condition or are simply growing older, long-term care insurance can be crucial to making sure you get the help you need without depleting your savings. This type of insurance covers a wealth of services often not covered by regular insurance. 

Right now, you might not need long-term care insurance, but it’s good to plan for the future. According to a study by the Urban Institute and the U.S. Department of Health & Human Services, approximately half of  65-year-olds today may develop a disability requiring long-term care for nearly two years, and 1 in 7 of those individuals will need care for more than five years. 

Knowledge is power and, in this case, it can save you a lot of trouble later in life. On June 9, Advice Chaser will host a webinar on long-term care insurance. But what is it and what does it cover?

What Long-Term Care Insurance (Usually) Covers

Insurance providers look at whether or not you’re able to perform “activities of daily living,” or ADLs. These activities include:

  • Bathing
  • Dressing
  • Meal preparation and eating
  • Getting on and off the toilet
  • Getting out of and into bed

Struggling with two or more ADLs, or suffering from dementia or another cognitive impairment may make you eligible for long-term care coverage. 

These policies can cover:

  • At-home assistance with ADLs
  • Nursing homes
  • Adult day-care
  • Respite care
  • Short-term hospice

Respite care provides compensation to caregivers for two to three weeks a year, allowing paid time off for family members who provide long-term care. 

Some policies may not consider hospice care as long-term, and so this type of service may be covered by Medicare. It varies between insurance providers, so this is something to keep in mind. 

Medicare will cover short nursing home stays or very limited amounts of home health care if skilled nursing or rehab is required. But not everyone is eligible for Medicare. Long-term care insurance can cover anyone.

What Long-Term Care Insurance Doesn’t Cover

A pre-existing medical condition—which can be any illness or injury received before starting a new health care plan—may affect your policy. The Affordable Care Act made it illegal to deny coverage due to pre-existing medical conditions. Still, you may need to wait several months after buying the policy in order to use your benefits. 

Additionally, care insurance doesn’t necessarily mean medical insurance. Medical care costs are not covered by long-term health care but, again, may fall under Medicare if you’re eligible. 

The Benefits of Long-Term Care Insurance

Without long-term care insurance, you’ll need to rely on your own savings, Medicaid, federal or state insurance programs. You can’t guarantee you won’t need care.

  • Protect your savings: Without insurance, all expenses need to come out of your own pocket. You can apply for help from Medicaid or federal and state insurance programs, but only after you’ve burned through most of your own savings. 
  • Provide choices: As the old saying goes, you get what you pay for. If you have more money on hand, you can get better care instead of being limited to nursing homes that accept Medicaid. 
  • Tax benefits: The IRS treats long-term care insurance like regular health insurance, so every dollar received is excluded from income, and the premiums are tax deductible. This means the cost of a nursing home or any at-home services are considered medical expense deductions. 

What Are Your Options?

If you don’t want to pursue long-term care insurance, it’s still a good idea to think of ways you can soften any financial blows in the future. A financial advisor can help you make a savings plan to cover these needs. 

Other options include applying for short-term care insurance or critical care insurance. They can provide coverage for up to two years and have lower premiums. The obvious downside is the short-term aspect of care coverage. Often, these policies have little to no waiting period, so benefits start right away. 

Long-term care coverage can have a huge impact on your quality of life at a vulnerable age and save you from serious financial strain. To learn more, sign up for our webinar on Wednesday, June 9, at noon PDT. Dina Mabrey, of BGA Premier Solutions, will share valuable insights about long-term care insurance that can help you decide what coverage you need.

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