Long Term Care Insurance
Protect Your Assets with Long Term Care Insurance
Most of us have spent a lifetime accumulating wealth to provide for a secure retirement. Yet even with careful planning and a sound investment strategy, all of that wealth can be exhausted in a matter of years by the financial devastation of a long-term illness.
Medicare coverage for long term care is extremely limited and provides coverage only after a hospitalization. Medicare coverage is limited to short-term recovery benefits for skilled care in a nursing home and pays only for home health visits and nothing for eight-hour shifts at home. Most private health insurance plans pay only for short-term recovery benefits.
The problem is that most long-term care is on a non-skilled custodial type and is not covered by Medicare. Although Medicaid covers this type of care, you are required to "spend down" your assets to qualify. The law severely restricts the practice of transferring assets to qualify for Medicaid benefits. Many nursing homes have left the Medicaid program due to poor reimbursements.
Long term care is extended chronic care to help with daily activities such as bathing, dressing, getting in and out of bed or a chair, toileting, continence or eating. It may be needed for a cognitive impairment such as Alzheimer's.
Nursing homes account for only 15% of long-term care; the other 85% occurs in the community, mostly at home, but also at adult day-care centers. The fastest growing segment of long-term care is at assisted-living facilities where basic non-skilled custodial care is available with private, independent apartment accommodations.
The cost for such care is expensive ranging from an average of $180 per day in Pennsylvania for a nursing home (over $65,000 a year) to $150 per day for home health care (almost $55,000 a year) and $85 per day for assisted-living care (over $30,000 a year). Moreover, health care prices are rising faster than general consumer prices, and the costs are expected to triple over the next 20 years, according to the U.S.General Accounting Office.
Since the National Academy on Aging Society reports the chances are that 50% of senior citizens will need long term care, it is easy to see how anyone's nest egg can quickly be wiped out by a chronic illness that could last three to five years or longer.
You have three choices:
1. Self Insuring 2. Medicaid 3. Long Term Care Insurance
Self-insuring for this type of loss is an option; however, it is usually only recommended for those who are willing to set aside at least $200,000 dollars for each spouse and still leave enough to support a spouse or other dependents.
If your savings are not extensive and annual income is less than $30,000, you are likely to qualify for Medicaid soon after entering a nursing home.
For those families and individuals who fall somewhere between these two extremes, a long term care insurance policy may be the best option to protect your assets, including your retirement and investment portfolios.
When you purchased a fire insurance policy to protect your home, you were betting in favor of a potential risk that most likely will not occur. To appreciate the rareness of a home fire, consider how many home fires you have witnessed in your own neighborhood within the last year. Also consider that in the event of a house fire, there is a total financial catastrophe for most people. For that reason, fire insurance policies are common. This scenario describes insurance at its best: everyone pays a modest premium and in return receives the assurance they will not bear the full burden of a rare catastrophe. In buying Long Term Care insurance, the consumer and the insurance company are engaging in a far different bet. The probability of the purchaser needing long-term health care at some time in the future is over 50%! Needing Long Term Care is not rare. It is virtually guaranteed.
Protect your hard earned assets today and consider purchasing a Long-Term Care policy for you and your spouse.
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