Long term care (“LTC”) is inevitable for many Americans. With this type of care comes a hefty price tag. As you plan for your retirement you should also consider how you will pay for extended care. One option is LTC insurance, which is private insurance used primarily to fund all or part of nursing home or at home care.
Pay for the Care of Your Choice
Long term care insurance provides you with more possibilities for your care needs. Basically Medicare covers hospital costs. Generally, Medicare doesn’t pay for long-term care. At best, Medicare pays only a portion of the cost for a medically necessary skilled nursing facility for 100 days and nothing thereafter. And, you must meet certain conditions for Medicare to pay for these types of care.
Most long-term care is to assist people with support services such as activities of daily living such as dressing, bathing, and using the bathroom. Medicare doesn’t pay for this type of care called “custodial care.” Custodial care (non-skilled care) is care that helps you with activities of daily living, feeding yourself, bathing and so forth. It may also include care that most people do for themselves, for example, diabetes monitoring.
Since Medicare is not a source of funding for custodial nursing homes many turn to Medicaid for assistance. But remember, Medicaid is geared toward paying for the long term care of the indigent who are in nursing facilities. There are financial qualifications to access Medicaid. Many people would prefer to stay in their own home until death, but with restrictions on what Medicare and Medicaid will cover, these individuals often cannot afford the extra cost.
If you know that you would not be happy in a nursing home, LTC insurance could really help you make your dream of staying at home a possibility. This insurance covers most in-home care costs.
Cover Additional Costs
After Medicare pays for hospital care, some expenses of a skilled nursing facility – at least for 100 days – or in-home care, and doctor services associated with long term care, there are many expenses that you will still have to pay from your own financial resources. A LTC insurance policy can help you pay for those expenses instead of dipping into your retirement account or your loved one’s inheritances.
The Cost of LTC
If you do decide to purchase Long term Care Insurance, you should be aware of the cost of LTC coverage. Like life insurance, your LTC insurance premium is based upon your age and your health. If you are younger and healthier you may be able to lock into a lower premium. This could help you keep your costs down when you reach the age where long term care is more likely. Even then, carriers have the right to increase premiums as you age and usually do so. Still, having long term care insurance early is also a good idea, since even in your prime you could endure an accident that would require extended care.
Larry Parman
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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