What is Long Term Health Insurance?
When you are younger and mobile, it is hard to imagine a time you will not be so agile, and you will age and need help to do simple chores.
The question you should be asking yourself is how you will pay for it. One way to prepare is to buy long-term health insurance, which refers to services that are not in the coverage of normal health insurance.
This includes your assistance with routine chores such as getting in and out of your bed, taking a bath, and even dressing
A long-term insurance policy covers the cost of this care if you have a disability, chronic illness, or disorders like Parkinson’s or Alzheimer’s disease.
Most policies will usually refund your money for care accorded in various places like:
- A nursing home
- Your Home
- Assisted facility
- Adult daycare centers
Long term health care insurance is a financial plan that you should consider once you are in your fifties.
You should not wait until you require the care to purchase this insurance because once you have a condition or disorder, you are automatically disqualified from long-term care insurance.
Why Long Term Health Insurance?
According to a revised 2016 survey by the U.S Department of Health and Human Services and the Urban Institute, almost half of the 65+-year-old people will develop a disability or illness that will require long-term care service.
Most of these individuals need care for not more than two years, but at least 14% of these will need this care for over five years.
Regular health insurance such as Medicare does not cover any long-term care services. Medicare only covers short periods of home care if you need rehab or skilled nursing, such as when recovering from a stroke, or limited nursing home care.
Medicare does not pay for services like custodial care, which comprises supervision and assistance with daily chores.
With no long-term insurance, you have to pay for these services. You can only get assistance via Medicaid.
This is a state-run health insurance program for people in low- to no-income brackets, but only when you have exhausted your savings.
You should consider Long-term insurance for these reasons:
Protection of Savings
Long-term care expenses can deplete your savings very fast. According to a Cost of Care Survey in 2016, the average care cost in a semi-private room in a home is $89,297 per year while a private room costs $100,375.
No matter how much you had saved, it will be gone in a few years.
To Get More Care Choices
The more money you are capable of spending, the better your care quality. If you rely on Medicaid, you will have a limited choice of nursing homes that accept payment from the federal program.
In most states, Medicaid does not pay for individuals who need assisted living.
If you are in the low-income bracket and have little savings, you cannot afford to buy long-term care insurance.
A long-term care policy needs at least 5% of your income as advised by the National Association of Insurance Commissioners.
How Long Term Insurance Works
To buy a long-term insurance policy, fill out an application form that asks health-related questions. The insurer may request to view your medical records and conduct a face-to-face or telephone interview.
Choose the coverage amount you desire. These policies cap for you the amount they pay out per day, as well as the lifetime payouts.
Once approved for the insurance coverage and your policy issued, you can begin to pay the premiums.
In most long-term insurance policies, you get benefits when:
- You cannot perform at least two of the six ADLs (Activities for Daily Living) on your own
- If you have cognitive issues such as dementia or Alzheimer’s.
ADLs include:
- Bathing
- Dressing
- Incontinence care
- Eating
- Toileting (sitting and getting off the toilet seat)
- Transferring (Getting on or off a chair or bed)
When you need to claim care, the insurer checks your medical history and assigns a nurse to do an assessment. Before the insurer approves a claim, they must approve your care plan
Elimination Period
Under most long-term care policies, you must undergo an elimination period. This is where you pay for the services with your own money for a specific period of between one and three months. After this period elapses, the insurer reimburses you.
The policy will start the payouts when you become eligible for benefits, and after receiving paid care for the specified amount.
Some insurers have an option of shared care when two spouses purchase policies where they share the coverage costs. This means if you max out your policy, you can use your spouse’s benefits.
Conclusion
Elderly or long-term invalid care is expensive, so taking care of these expenses before they happen is crucial. When you reach 50, you must take up a long-term care policy that will cover your costs for care in case you need it.
