Long Term Care Information

By B. Padget, Senior Health Insurance Program of the Illinois Department of Insurance.


Medicare logoCurrently in the U.S., long-term care is the largest national catastrophic health expense. That simple fact has many implications for us personally, and also as a society, as more and more of us reach ages 65 and older. The number of frail elderly is estimated to double within the next fifteen years, and over 25% of those people who live to age 65 will eventually need some kind of long term care. Here are facts we all need to know about long term care:

Long term care is usually defined as the care a person needs when they can no longer care for themselves due to prolonged illness or disability. It can range from simple help in the home with things like bathing and dressing to highly skilled nursing care provided in a variety of institutions such as nursing homes or All Day Club Services.

The cost varies according to the type and frequency of the care needed. Currently the cost of a nursing home ranges from $25,000-$50,000 per year.

Medicare pays less than 2% of the total national cost for nursing home care. Medicare covers nursing home costs only in limited circumstances in skilled nursing care facilities, and then only for a short period of time for any one individual.

Nearly half of all nursing home costs are paid out of pocket by individuals and their families. Long term care insurance pays about 5% of these costs, although that percentage will go up as more people purchase policies. The rest of the national bill for long term care nearly half is paid by Medicaid.

Medicaid only covers those people who have insufficient income and assets to pay the nursing home bills on their own. In other words, a person may have to become nearly impoverished by paying the bills themselves until their money runs out before Medicaid will take over payment.

There is a legal provision that allows a spouse in the community to keep (see updated amounts) monthly income and family assets (excluding a house and one car) and still allow the nursing home spouse to qualify for Medicaid to pay the nursing home bills. It is important to remember, however, that in Illinois any dollars spent by Medicaid for an individuals care are subject to recovery upon the death of the community spouse. Contact your local county Illinois Department of Human Service office (Public Aid) for more details on the Medicaid program.

Many people who wish to avoid the extraordinary costs of a nursing home stay and do not want to rely on Medicaid for help with these costs choose to purchase a Long Term Care Insurance policy. These policies must provide coverage for all levels of care: skilled, intermediate, and custodial. The majority of people in nursing homes are getting only custodial care. In other words, they need help in bathing, dressing, and other daily assistance, but do not receive skilled care.

Typically, LTC insurance is the indemnity type meaning that it pays a fixed sum per day. This amount varies depending upon the amount a person chooses when working with an insurance agent. Most plans are purchased to provide coverage for a specific amount of time, for example, one, three, or five years. Some policies will provide coverage for a lifetime. Another choice a person needs to make when purchasing nursing home insurance is the elimination period, which means nearly the same thing as a deductible. This term applies to the number of days a person must be in a nursing home and pay on their own before the insurance policy will begin paying its benefits. Most plans offer the choice of 3 elimination periods: 0, 20, or 100 days.

caregiverIt has been reported that the average stay in a nursing home is 2 years, but that the majority of individuals who enter a nursing home are released or pass away within 90 days. With all these facts, a person must consider not only the cost of one day in a nursing home in their area, but also the costs associated with the benefits that they may choose to cover their anticipated stay in a facility at some point. You would also need to consider your family history of illness and long-term care needs. Another important point, don't purchase a policy that strains your budget; if the policy premium were to increase even slightly in the future and you are not able to afford your coverage, you could lost the policy altogether.

Nearly all insurance companies will ask detailed health questions before issuing a nursing home policy. Heart problems, leukemia, Alzheimer's or Parkinson's disease, etc., will cause these companies to decline your business, rather than assume a bad risk. When applying for insurance, it is important to always answer all medical questions truthfully and accurately, or the coverage you purchase may be later denied, when you most need it.

Currently the cost of a year in a nursing home can vary between $25,000 and $50,000. We have established several facts:

Many people who wish to avoid the extraordinary costs of a nursing home stay and do not want to rely on Medicaid for help choose to purchase a long term care insurance policy.

In Illinois, long term care insurance policies must provide coverage for all levels of care: skilled, intermediate and custodial. Typically, this insurance is the indemnity type, meaning that it pays a fixed sum per day. This sum varies, depending upon the amount a person chooses when purchasing a long term care policy.

Most plans are purchased to provide coverage for a specific amount of time, for example, 1, 3, or 5 years. Some policies will provide coverage for a lifetime. It has been reported that the average stay in a nursing home is two and one half years, but that the majority of people who enter a nursing home are released or pass away within 90 days.

Another choice a person needs to make when purchasing nursing home insurance is the elimination period, which means nearly the same thing as a deductible. This term applies to the number of days a person must be in a nursing home and pay on their own before the insurance policy will begin paying its benefits. Most plans offer the choice of three elimination periods: 0, 20, or 100 days.

Also, consider your family history of illness, and anticipated long term care needs. Also, it is important to consider the cost of one day in a nursing home in your area to ensure you have enough insurance to cover an eventual stay. Lastly, don't purchase a policy that strains your budget; if the policy premium were to increase even slightly in the future, and you are not able to afford your coverage, you could lose the policy altogether.

Many companies offer home health care benefits in addition to coverage for nursing home stays. It is extremely important to read the policy, as each company will be very specific as to where the policy will pay its benefits, and under what conditions. No two policies are identical.

Nearly all insurance companies will ask detailed health questions before issuing a nursing home policy. Heart problems, leukemia, Alzheimer's or Parkinson's disease, etc. will cause these companies to decline your business rather than assume a bad risk. When applying for insurance, it is important to answer all medical questions truthfully, or the coverage you purchase may be later denied when you most need it.

Comparison shopping is important when buying any insurance policy. The Illinois Department of Insurance through the Senior Health Insurance Program (SHIP) can provide at no cost a Shoppers Guide to Long-Term Care Insurance. SHIP is a volunteer program designed to assist seniors and their caregivers through the complexities of Medicare, Medicare supplements, and long term care insurance.

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