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Long Term Care Insurance

Find out more

Long Term Care Insurance

Why is LTC insurance the most important part of retirement planning.

 

  • The chances of living a long life are real​
  • Who will care for you when you are old?
  • It’s not your life that will end when you need long term care. It’s someone else’s

Old man's birthday

What is Long Term Care and How Much Does It Cost?

Woman in wheelchair

Long Term Care Insurance – Insurance Pro Nc

 

Long term care insurance, LTC is any of a wide range of ongoing services and support systems designed to help individuals perform self-care when they are unable to do so themselves. It can be something as simple as one spouse helping another out of bed at home, or it can involve providing round-the-clock medical care to a chronically ill patient in an institutional facility where the individual lives full time. Long-term care can also be anything in between these two extremes. For example, it can include:

  1. Visits by a professional caregiver in an individual’s home a few times a week.
  2. Driving an individual to a community center each day and bringing him or her back home every evening.
  3. Full-time custodial care in an institutional facility that does not offer any medical care.

Costs of Long-Term Care

 

In addition to growth in demand, the cost of long term care services has also been increasing. Following are national averages for various types of long-term care.Though actual costs vary considerably by region and by provider, these figures provide some idea of what costs are, and more importantly, the cost trend for various types of care. Note that nursing home costs are rising faster than costs for long-term care services delivered in the home.

According to the Genworth 2021 Cost of Care Survey, the national median costs for long-term care were as follows:


Type of Service and Annual Cost 

  • Homemaker services $54,000
  • Home health aide services $55,000
  • Adult day care health services $19,200
  • Assisted living facility $51,600
  • Semi-private room/nursing home $94,000
  • Private room/nursing home $106,000 

Long-Term Care Insurance

 

Addressing the need for long term care presents many challenges:

  1. The need can be very costly—potentially, hundreds of thousands of dollars.
  2. The need is unpredictable, both in terms of its timing and in the extent of care that will be required.
  3. The need has the potential to inflict a tremendous burden—financially and emotionally—on family and friends who themselves may not be capable of assuming it.
  4. The need may ultimately result in having to rely on public assistance, which greatly limits one’s options and choices.

Long-term care insurance answers these challenges in a way that few other options do. As with other forms of insurance, long-term care insurance deals effectively with cost, unpredictability and the transfer of risk and financial responsibility. That’s because the event that creates the need also creates the funds to address the need.

Senior living

Protection Against Spousal Impoverishment

Current Medicaid Rules

 

Current Medicaid rules allow the community spouse—that is, the spouse who is not applying for Medicaid—to keep a certain amount of the couple’s total countable assets, subject to certain minimum and maximum limits established by federal and state requirements. The amount the community spouse is allowed to retain is known as the community spouse resource allowance, or CSRA. CSRA Limits The minimum CSRA limit is set by the federal government, and all states are required to abide by it.

The minimum limit may change each year to reflect changes in the cost of living. (As a point of reference, the minimum limit was $27,480 in 2022.) Generally speaking, community spouses are allowed to keep countable assets up to the amount of the full minimum limit, and (in most states) up to 50 percent of assets if they exceed the minimum limit, up to the amount of the maximum limit.


The maximum CSRA limit is also set by the federal government, but states are allowed to set a lower maximum limit if they choose. States are not permitted to set a higher maximum limit than the figure established by the federal government. Like the minimum limit, the maximum limit may change each year to reflect changes in the cost of living. (As a point of reference, the federally set maximum limit was $137,400 in 2022.) Some examples will help clarify how these minimum and maximum limits are applied to protect the community spouse from impoverishment while spending down assets to qualify an institutionalized spouse’s nursing home expenses for payment by Medicaid.

Past Rules on Medicaid for LTC

 At one time, if an individual applying for Medicaid was married, both the individual and his or her spouse had to be impoverished to qualify for Medicaid even if only one of them needed to be cared for in a nursing home. The healthy spouse was reduced to poverty so that the other spouse could qualify for Medicaid long-term care services. Fortunately, spouses are now protected against such impoverishment. 

LTC

Drawbacks to Medicaid Assistance

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Working on a puzzel

 

If  an  individual  needs  to  utilize  Medicaid,  he  or  she  will  run  into some problems. These problems will be:

  • No  ability  to  choose  where  he  or  she  will  receive nursing care;
  • A loss of financial independence; and
  • A possible inability to pass on assets to heirs.

When  individuals  or  families  have  the  financial  resources  to  pay for the  long-term  care  on  their  own,  the  type  of  care  provided would  become  a  matter  of  choice  and  availability.  The  individual and/or family could decide which facility to go to or if not a nursing facility, the care could be provided in the home. Unfortunately the options  with  Medicaid  are  limited.  Medicaid  will  provide  for  the individual  where  there  is  a  bed  available.  We  should  realize  that nursing  homes  will  fill  their  beds  with  customers  that  are  paying the full rate and not the discounted rate paid by Medicaid. It is just good  business  economics.  Another  important  point  to  realize  is there has to be a bed available.Since nursing homes fill the beds with “paying” customers, a bed may  not  be  readily  available  when  the  need  arises  for  the Medicaid recipient. Lack of availability of a bed will cause a delay in   placement   of   the   individual   and   likely   force   the   family (assuming  there  is  a  family)  to  take  care  of  the  individual  until  a bed is available.The bed available may be in the same community or it may be in another. The facility may be an “adequate” facility meeting the requirements  of  Medicaid,  but  not  as  nice  as  a  facility  if  the Medicaid recipient had his or her choice. Medicaid will try to place the  recipient  as  close  to  his  or  her  home  as  possible,but  bed availability is the key.

 

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Doctor and patient

 Most long term care involves assisting with basic personal needs rather than providing medical care. The long-term care community measures personal needs by looking at whether an individual requires help with six basic activitiesthat most people do every day without assistance, called activities ofdaily living (ADLs). ADLs are important to understand because they are used to gauge an individual’s level of functioning, which in turn determines whether the individual qualifies for assistance like Medicaid or has triggered long-term care insurance coverage. The six ADLs are generally recognized as:

  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth. 
  • Dressing.The ability to get dressed by oneself withoutstruggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one's bladder and bowel functions.


There are other more complicated tasks that are important to living independently butaren't necessarily required on a daily basis. These are called instrumental activities of daily living (IADLs) and include the following:

  • Using a telephone
  • Managing medications
  • Preparing meals
  • Housekeeping
  • Managing personal finances
  • Shopping for groceries or clothes
  • Accessing transportation


Long-term care providers use ADLs and IADLs as a measure of whether assistance is required and how much assistance is needed. In order to qualify forMedicaidnursing home benefits, the state may do an assessment to verify that an applicant needs assistance with ADLs. Other state assistance programs also may require that an applicant be unable to perform a certain number of ADLs before qualifying. In addition,long-term care insuranceusually uses the inability to perform two or more ADLs as a trigger to begin paying on the policy.  

Long Term Care Insurance

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