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Long Term Planning


Long Term Care is the help you receive when you are unable to care for yourself during a prolonged illness or disability. Long-term care is different from traditional medical care in that medical care services rehabilitate or correct certain medical problems, while long-term care services help a person maintain his or her lifestyle.

Long-term care typically becomes needed as a part of normal aging, but can also be necessary at any age due to a variety of illnesses e. g. multiple sclerosis, stroke, arthritis, or Alzheimer’s disease. An indication that a person needs long-term care is his or her inability to perform some or all of these routine daily activities:

  • Dressing
  • Transferring
  • Eating
  • Toileting
  • Bathing
  • Continence

Other common long-term care services and supports are for assistance with everyday tasks, sometimes called Instrumental Activities of Daily Living (IADLs), including:

  • Housework
  • Taking medication
  • Shopping for groceries or clothing
  • Preparing and cleaning up after meals
  • Managing money
  • Caring for pets
  • Responding to emergency alerts such as fire alarms
  • Using the telephone or other communication devices

Where do you receive long term care?

Most people think of nursing homes when they talk about long term care but the term can refer to a variety of private and semiprivate care situations and services. These may include:

  • Your home
  • Adult day care centers
  • Assisted living facilities
  • Nursing Homes
  • Hospice facilities

Skilled nursing facilities, often called nursing homes, provide the most comprehensive range of services, including nursing care, nutrition management, and 24-hour supervision. But many individuals do not need or wish to go into a nursing home and their family members often assume the burden of care, which over time may have a significant impact on the family members' lifestyle, finances, personal and work commitments, and their physical and emotional well-being.

Who pays for Long Term Care

Many people mistakenly believe that their medical insurance or the government will pay for their long term care. In most cases, however, except for Medicaid recipients it’s up to the individual to cover the cost of long term care.

Medicare will pay up to 100 days per benefit period for a certified skilled nursing facility (SNF) if it's medically necessary for you to have skilled nursing care (such as changing sterile dressings). In this situation Medicare will pay:

  • 100% for the first 20 days of confinement, but only if it occurs after a three-day-or-longer hospital stay
  • For days 21-100 Medicare requires a co-payment from the beneficiary
  • Medicare will not pay anything for over 100 days of an SNF stay

However, most nursing home care is custodial care, such as help with bathing or dressing, and Medicare doesn't cover custodial care if that's the only care you need

Long-term-care coverage for Medicaid recipients is based on the income and assets of the individual requiring care, and most states usually cover only care received in an approved skilled nursing home. Where states do allow home-based long term care the coverage is on a limited basis.

Medicaid has published the following guidelines regarding assets:

  • Your home: The state can't put a lien on your home if there's a reasonable chance you'll return home after getting nursing home care or if you have a spouse or dependents living there. This means they can't take, sell, or hold your property to recover benefits that are correctly paid for nursing home care while you're living in a nursing home in this circumstance. In most cases, after a person who gets Medicaid nursing home benefits passes away, the state must try to get whatever benefits it paid for that person back from their estate. However, they can't recover on a lien against the person's home if it's the residence of the person's spouse, sibling (who has an equity interest and was residing in the home at least one year prior to the nursing home admission), or a blind or disabled child or a child under the age of 21 in the family.
  • Your assets: Most people who are eligible for Medicaid have to reduce their assets first. There are rules about what's counted as an asset and what isn't when determining Medicaid eligibility. There are also rules that require states to allow married couples to protect a certain amount of assets and income when one of them is in an institution (like a nursing home) and one isn't.
  • Transferring your assets: You can't give your assets away to family members or non-family members, rather than use your assets to pay for your nursing home care. If you give assets away within 5 years before the date you apply for Medicaid, or even after you apply, the gift may be treated as a transfer of assets for less than fair market value. Transfers for less than fair market value may subject you to a penalty, and the penalty is that Medicaid won't pay for your nursing home care for a period of time. How long that period is depends on the value of the assets you gave away. There are limited exceptions to this, especially if you have a spouse, or a blind or disabled child. But as a general rule, giving away your assets can result in no payment for your nursing home care, possibly for many months or even years.

You can personally finance the cost of long term care using your own assets or by buying long term care insurance.

What Does Long Term Care Cost

The cost for long term care varies by your location but here are some 2012 national averages.

  • Monthly cost for a private room in a nursing home was $7,440, up by 4% compared to 2011
  • Monthly cost for a semi-private room in a nursing home was $6,660
  • Monthly base rate for an assisted living community was $3,550
  • Average daily rate for adult day services was $70
  • Hourly rate for home health aides was $21

Your premium rates are based on:

  • Your age and gender. Of course, the younger you are, the lower your cost will be
  • Your health. Certain medical conditions can increase the premium by up to 75%
  • Where you live. Long term care costs partly depend on which area of the country you live
  • The benefits you choose and the riders that you pick

What Is Long Term Care Insurance?

It is a cost-effective plan offered by private insurance companies to help pay part or all of your long term care expenses. Long term care policies have many different options and levels of coverage. Most long term care policies have these basic features:

  • A daily benefit, usually ranging from $50 to $250 per day
  • An elimination period (period before benefits begin), typically ranging from 0 to 100 days
  • A maximum benefit period (pay-out period)that can range from one year to lifetime, depending on your selection.

Long term care policies are available in various ways:

  • Purchase an individual policy from an insurance company
  • As a rider with a life insurance policy or annuity
  • Enroll through membership in an association
  • A group policy sponsored through your employer

What is covered by long term care insurance

The most common services covered by long term care insurance are:

  • Nursing home care
  • Assisted living care
  • Personal care in your home, which may include homemaker services such as housekeeping or running errands
  • Home health services, which must include skilled nursing care and physical therapy
  • Adult day services

Other services that can be offered are:

  • Caregiver training for family members
  • Respite Care
  • Hospice Care
  • Care after a hospital stay
  • Inflation rider

Note that long-term care policies can exclude coverage for the following conditions:

  • Pre-existing conditions.
  • Mental health and nervous disorders.
  • Care by family members.

Long term care is a crucial part of retirement planning. We strongly urge you to meet with a senior care consultant before you make any decision on Long Term Care.