The majority of us will use some sort of long-term care services as we get older. You may need assistance with activities ranging from bathing, eating and taking medication to shopping for groceries, managing money and preparing meals.
Because the cost of these services continues to rise — now averaging anywhere from $5,000 to $10,000 per month — you need to start budgeting and planning now so that you are prepared when you need these support services, whether it be at home, in the community, in assisted living facilities or in nursing homes.
Long-term care insurance
As you plan, keep in mind that there are long-term care insurance policies that can provide financial help, but that age and physical condition are factors in the cost. If you are older or less well, then you can expect the policy to have higher premiums and more stringent terms. On the other hand, if you are younger and in good health, you can expect more flexibility in the terms and premiums.
As is true with any insurance product, you'll need to look carefully at each policy offered and its options. Consider such items as:
- What benefits are offered? For example: daily payments amount (which could be up to a preset daily amount for incurred expense reimbursement or daily pre-set disability payment amounts regardless of actual expenses) benefits for certain period, lifetime benefit amounts, comprehensive or facility care only, home modifications to support physical capacity limitations or risks, care coordinator services, payment for family/friend provision of care.
- What conditions trigger coverage? For example: a determined impairment in activities of daily living (ADRs) or specified cognitive impairment.
- When will benefits begin? That is, is there an elimination period — a set period of days after the requisite triggering condition exists before benefits start? How long is the elimination period?
- Will benefits be fixed or will they adjust with inflation?
- What exclusions from coverage or from certain policy benefits apply? For example, If you already need or are in long-term care, or if you have certain progressive and severely debilitating conditions.
- How much will it cost?
To learn more about this option, talk to an insurance agent who specializes in these types of policies.
Government assistance
The government provides assistance for some services to those eligible for Medicare, such as nursing home rehabilitation and post-hospitalization home health care. But it doesn't address long-term chronic needs or custodial care.
Below are the major categories of financing and what is available under each one for persons needing care:
Medicare
Overview: Limited coverage for nursing home care following a hospital stay and home health if you require a nurse or other skilled provider.
- Nursing home care: Pays in full for days 1-20 if you are in a Skilled Nursing Facility following a recent 3-day hospital stay.
If your need for skilled care continues, may pay for the difference between the total daily cost and your copayment of $137.50 per day for days 21-100. After day 100 does not pay.
- Home health and personal care: Limited to reasonable, necessary part-time or intermittent skilled nursing care and home health aide services, some therapies if a doctor orders them, and a Medicare-certified home health agency provides them. Does not pay for on-going personal care or only help with Activities of Daily Living (also called "custodial care").
Does not cover assisted living, continuing care retirement communities or adult day services.
Medigap insurance
Overview: Private insurance purchased to cover Medicare cost sharing following a hospital stay and home health if you require a nurse or other skilled provider.
- Nursing home care: May cover the $137.50 per day copayment if your nursing home stay meets all other Medicare requirements.
- Home health and personal care: Not covered under current policies. Some policies sold prior to 2009 offered an at-home recovery benefit that pays up to $1,600 per year for short-term at-home assistance with activities of daily living (bathing, dressing, personal hygiene, etc.) for those recovering from an illness, injury, or surgery.
Does not cover assisted living, continuing care retirement communities or adult day services.
Private health insurance
Overview: Varies, but generally only covers services for a short time following a hospital stay, surgery or while recovering from an injury.
- Nursing home care: Varies, but limited.
- Home health and personal care: Varies, but limited.
Does not cover assisted living, continuing care retirement communities or adult day services.
To learn more, you may want to talk to an elder law attorney who works exclusively with elder law issues such as how to qualify for Medicaid and other government benefits and what actions you may need to take to legally qualify.
Making a decision
The decision to prepare for long-term care arrangements is very personal. You'll need to:
- Consider the resources you'll have available for future long-term care costs and the extent of assistance you'll need to make up the difference.
- Consider if you'll have family members to assist as caregivers should you require it, or if you'll have to turn to outside sources.
- Think about what is most important to you in terms of the site and extent of care you'll want.
- Start with a preliminary analysis and plan to meet your expectations for your own situation.
Even though thinking about how your care needs may change as you get older isn't the most fun topic, it is a necessary one.
Another necessary topic you may not have considered yet? Funeral planning.
