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Why is this an important option to consider? Consider this:
Medicare
Medicare Primer
Equipment Coverage
Resource Links
Prescription Drugs
The right question
Need to know (pdf)
MN Approved Cards (pdf) Resource Links
Medicaid
Medicaid Primer
Medicaid Services
Medicare vs Medicaid
Resource Links
Medigap
Medigap Overview
Standardized Plans
MN Company List (pdf)
Resource Links
Long Term Care Insurance
Overview
Coverage Options
Resource Links
Minnesota Programs
Medical Assistance Elderly Waiver (pdf)
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Approximately 60% of us who reach age 65 will need long term care at some time in our lives.
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Many people don't realize that the need for long-term care can strike at any time. Statistics show that 40% of people receiving long-term care services are working age adults, between the ages of 18 and 64.
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A common misconception is that Medicare or Medicaid will pay for long- term care. That is not the case. Medicare coverage is limited to skilled care following a hospital stay. It does not cover purely custodial care, the type that's required by most people in nursing homes. The US Dept of Health and Human Services estimates that Medicare only pays 10% of long-term care costs. Medicaid does not kick in until you and your spouse deplete your assets down to $2000.
What Long-Term Care Isn't
Long term care isn't the type of care that you receive in the hospital or your doctor's office. It isn't the medical care you need to get well from a sickness or an injury. It isn't short-term rehabilitation from an accident or recuperation from surgery. Long term care is not always administered in a nursing home. In fact, more than 80% of all people receiving long term care assistance are not in nursing homes.
What About Medicaid and Medicare?
Medicaid is designed to protect those with minimal assets. To qualify, many people "spend down" or deplete nearly all of their assets. In fact, because spouses have a legal responsibility to support each other, both must spend down their assets before an ill spouse may qualify for Medicaid benefits.
Medicare only pays limited amounts for skilled care following a hospital stay. It does not cover purely custodial care, the type that's required by most people in nursing homes.
When to Consider Buying?
- Need: People who do not need long-term care insurance include those
- Whose only income comes from Social Security and who have limited assets
- Who qualify for Medicaid or will qualify soon after they enter a nursing home
- Who have large financial reserves
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Who want to protect their assets or those of a family member
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Who do not want to depend on a family member for care
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Who want to make sure they receive high quality care
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Who want to have more control over when, how, where they receive care – for example, in their home rather than a nursing home
- Costs: Long-term care insurance is expensive but compared to what? Consider this:
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Today, the national average cost of a semi-private room in a nursing home is $52,000 annually. Depending upon where you live and the type of facility that you would prefer, costs can be significantly higher.
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Home health care is expensive, too: the national average annual cost of home health care is well over $20,000 (that's $18/hour, five hours per day, five days a week for a home health aide). This figure is expected to climb to $68,000 by 2030.
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And what if you need long term care in the future? Nursing home costs have been going up about 5% a year. If that continues for another 30 years, the cost of nursing home care (for a semi-private room) in 2032 is expected to be $190,600 a year.
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A common misconception is that your “other insurance”, such as your health plan or disability insurance, will cover the costs of long-term care. That's usually not the case. Health insurance is designed to cover medical care for illnesses or injuries, such as cancer, a broken arm, or a stroke. For example, it will pay the hospital bills you incur for a stroke. It won't pay for long term assistance with activities of daily living, such as dressing or using the bathroom. As for disability insurance, it is designed to replace the income you lose if you're unable to work, due to accident or injury. Disability benefits will help you pay your mortgage or your normal household expenses. Disability insurance provides no additional benefits for long-term care.
- Timing: Like most insurance, long-term care insurance premiums are lower the younger you are when you buy. So, it makes sense to purchase coverage when you are younger and when premiums are more affordable. The bi-weekly premium if you purchase coverage at age 40 that covers home and facilities care and keeps pace with inflation averages $35* or approximately $70 per month. At age 50, if you purchase the same plan, that plan will cost about $50 biweekly* or approximately $100 per month
*Sample premiums based on Comprehensive Plan with a $150 daily benefit amount, 3-year benefit period, 90-day waiting period and the automatic compound inflation option.
- Coverage:
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Number of years of coverage desired. The average stay in a nursing home is 2 – 3 years so most people choose a slightly longer time, typically 4 – 6 years.
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Maximum amount needed to pay for each day of care. Most people choose $100 - $150 per day. As a reference point, the amount you choose should be close to the average cost of care at nursing homes in your area.
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Options such as built-in inflation protection and a well-defined trigger for the start of benefits, for example, when a person can no longer do a basic daily activity.
Source: Adapted from The Merck Manual of Health & Aging (2004) and The Federal Long Term Care Insurance Program.
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