As it has become an integral part of every long term care planning essentials guide, a long term care policy is becoming a big question on everyone’s minds. Yes, it is true that they cost a lot of money. However, they provide a comprehensive solution that cannot be overlooked to one of America’s biggest problems: long term care.
Long term care insurance policies act as a shield from the unpredictable costs of care services in the country. By securing coverage years before you need the services, the policy will help you cover the costs when you do end up requiring them. Instead of relying on the assets and properties you have established, the policy will provide the funding that you need. This also shields your children from having to provide the care that you need or pay for the services.
The Importance of Understanding Long Term Care Policies
However, understanding these policies do not happen overnight. You will need to do a great deal of research and speak to the right people in order to get it right. After all, the concepts can be confusing and overwhelming to tackle alone.
As an example, let us look at the different ways long term care insurance policies can provide for your care requirements.
In planning for a long term care policy, you should be aware of the different payment methods. The more traditional way—the reimbursement method—means that you will have to cover the care or incurred costs first before submitting a claim for the payment you will receive according to the policy settlement conditions in your insurance. However, you may also opt for the indemnity period, which entails that you receive the full monthly benefit directly. Typically, you will not need to submit receipts, but you must be aware that indemnity policies may be more expensive because they pay out the maximum benefit each month.
That is why it is important to understand all the concepts that may affect your long term care policy in order to decide and plan effectively.
Asking the Right Questions and Finding the Best Answers
Let’s dive further dive into the discussion about long term care insurance policies and its various concepts. To make it easier to manage, here are questions and their answers that will guide you through planning.
What is Long Term Care?
Long term care is the assistance and supervision that people need with the Activities of Daily Living. These are simple tasks that people do on a daily basis—such as bathing, dressing, or transition from one place to another.
Often this is because of illnesses or health conditions, but elderly individuals also require the services because of limitation brought by old age. Please note that although the majority of the care recipients are in their older years, you can still end up needing them because of the reasons stated above.
Do I Really Need Long Term Care in the Future?
Although there is a slight possibility that you will not need this, these chances are slim. After all, studies show that 70% individuals turning 65 can expect to need long term care services in the following years. Moreover, these do not just cater to the elderly, individuals younger than 65 also find themselves needing care because of disabilities and accidents.
Without planning, people often resort to their family members despite the repercussions. In fact, as discussed in our earlier post entitled, 5 Reasons Why Women Need Long Term Care the Most, the lack of planning leads individuals to rely on family members—often women—to become their caregivers. They then end up with depleted resources and aggravated health conditions once the caregiving ends.
However, many people are still undecided because of the costs involved in long term care policy. This is understandable, but there are ways in which you can identify if the chances of you needing care are big or not.
One example of this is your health history. Consider checking if your family has a history of illnesses and conditions that could be passed down. Another is your lifestyle. How you treat your body now will reflect greatly in the latter years. If you are not living healthy, then it is likely that at some point in the future, all the conditions you put your body through will put you in a position to need care.
What is the Expected Cost of Long Term Care?
All retirees know that long term care costs are expensive, but not everyone is aware of what that truly means. To help you understand the gravity of the situation, here is a video by RetireSharp discussing the different costs of care and its impact on individuals’ lives.
Who Covers the Cost Rendered in Long Term Care?
Paying for long term care services can be done in various ways. From government programs to private insurance policies, people can select a method that works best for their circumstances and requirements. Listed below are the different methods in paying for care:
- Medicare and Medicaid – Medicare and Medicare are government insurance programs that help individuals cover care, albeit in varying ways.
Medicare pays for some part-time services for individuals who are homebound as well as short term skilled nursing home care. Bear in mind that specifically target long term care needs as it does not cover most long term care costs.
Medicaid, however, provides broader coverage compared to Medicare. It covers personal care, home health care, adult day care, and nursing home care, but it has steep requirements. This program was initially made for to assist individuals with limited income, so many might need to spend down their assets to qualify.
- Self-insurance – This is when people take the big risk of funding their own care through their own resources and funds. However, it is important to note that many end up failing to cover the costs with their own resources because of miscalculations. In order to pull this off successfully, you would need a great deal of resources and research.
- Long Term Care Insurance – This is an insurance product that targets the specific long term care needs of the individual. Each long term care policy is unique to fit the requirements of each policyholder.
It is advisable to be able to understand the kind of coverage that is provided in your insurance policy and how the benefits will be paid or reimbursed in the future before you buy your own long term care insurance policy.
What Does Long Term Care Insurance Cover?
Every long term care policy will have to describe the services they are covering, the kind of care that it will cover, who will have to provide the care and the requirements needed. To further understand what it entails, let us take a look at the scope it covers:
- Facility Care – Services received in care facilities, such as nursing home and assisted living facilities, are often be covered by long term care insurance policies.
- Home Care – Services received at home are also covered by long term care insurance policies. Moreover, depending on the policy details, some plans allow individuals to receive benefits in cash which means that they could use the money to pay family caregivers for their service.
Here are several service options that can be selected for care:
- Home Health Care – This is located in your residence and is done by skilled nursing care or other professional services.
- Adult Day Care– This is a planned program of activities that cater to the social- and health-related concerns of their care recipients. These often operate during the daytime.
- Personal Care– This is assisted living with additional Instrumental Activities of Daily Living or IADLs like telephone usage, medication management, the transition from one to place to another, shopping for important things, meal preparation, laundry and a little housekeeping.
- Homemaker Services– This is where you remain in your home while receiving assistance with activities and/or tasks.
- Hospice Services– Care received in your residence which is made to give physical, emotional, social and spiritual support.
- Respite Care– services provided in a nursing facility, in your residence, or even in a community-based program that is made specifically to relieve the main caregiver in your home.
Final Notes on Long Term Care Policies
A long term care insurance policy is not something that someone should take lightly. If you are planning on buying one, here is a detailed guide to purchasing a long term care policy. Through this post, you get to see what you are getting after the purchase.
Whether you choose to purchase coverage or not is entirely up to you. However, you need to know all the specifics and consequences before you decide.
At the end of the day, people choose to purchase a plan because they do not want to gamble their future. Would you rather live a problematic life in the future where you are facing financial trouble because of the cost of the long term care services you received? Or would you rather have a more comfortable and enjoyable life after retirement with the help of an insurance policy to back you up?