Long-Term Care Insurance
Choosing an appropriate time of when to purchase a long term care insurance policy may be a bit confusing. Finding the appropriate policy suitable to one’s lifestyle and needs can be challenging. At SilverCensus we encourage you to get educated on available options and get familiar with terminology that will help you make the right decision for your health care future. Here are a few frequently asked questions about Long-Term Care Insurance that you may find helpful:
What is long-term care insurance?
How does a long-term care policy work?
Should a relatively healthy person consider purchasing a long-term care insurance policy?
How have the demographics within the United States changed over the last 15 years?
What is the annual cost of long-term care?
What are the odds a person or spouse will need long-term care?
Does Medicare cover long-term care?
How does a long-term care insurance policy work?
At what age should I buy a long-term care policy?
If you have a lot of pre-existing conditions can you still qualify for a long-term care policy?
Do the rates ever go up on existing long-term care insurance policies?
Is prior hospitalization required for long-term care insurance policies to work?
How does inflation factor into a long term care policy?
How long of a benefit period should I consider when purchasing a long-term care insurance policy?
If I am wealthy, do I really need a long-term care insurance policy?
If I have a long-term care policy that I bought in New York and now live in Florida, can I use it anywhere in the United States?
Is long-term care insurance the same as disability insurance?
How does long-term care insurance protect my life savings?
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What is long-term care insurance?
(A) Long-term care insurance is a policy that covers home care, assisted living and nursing home care in the event of illness or injury. In addition long-term care insurance also covers skilled, short term intermittent and custodial care.
How does a long-term care policy work?
(A) If you're unable to perform two of the six activities of daily living and your doctor certifies that you need help in a home environment such as a home, assisted living, or a nursing care facility a long –term care policy will pay the recipient whatever benefit a policy was set up for. The six activities of daily living are: eating, bathing, dressing, toileting, transferring, or a cognitive disorder. As far as the cognitive disorder is concerned, the patient needs only verbal assistance in order to protect oneself or others from injury. He/she need not require assistance with any of the others six activities of daily living.
Should a relatively healthy person consider purchasing a long-term care insurance policy?
(A) Most people assume that if they're unhealthy that they would be most likely to use a long-term care insurance policy. The reality is that the longer you live, the healthier you are, and the more you need a long-term care insurance policy. This state of mind could be referred to as “the George Burns syndrome”. He was so healthy and so long-lived that he became frail and needed assistance for at least half a dozen years towards the end of his life.
How have the demographics within the United States changed over the last 15 years?
(A) Not too long ago people lived to be in their early to mid 80s. Now people are living well into mid 90’s and sometimes beyond. Many people stay healthy from the waist up but they have problems ambulating independently and suffer from general weakness. In addition, because of the significant rise Alzheimer's disease and dementia and early detection, people are living so much longer leaving a significant rise of aging Americans.
What is the annual cost of long-term care?
(A) According to the National Association of Insurance Commissioners, the average cost nationally of a year at a nursing home is $38,000. Costs tend to vary and can exceed in excess $80,000 a year. Home care expenses can range anywhere from $120 to $260 per day. Inflation is an important factor to consider. According to the United States General Acounting Office, these costs will triple in the next 20 years.
What are the odds a person or spouse will need long-term care?
(A) According to the Health Insurance Association of America, the risk of needing long-term care at age 50 is 1:5. This ratio is extremely high. At age 65, 4:10 will need long term care in some capacity and at age 75, 7:10.
Does Medicare cover long-term care?
(A) Medicare only covers skilled care during the first one hundred days in a skilled nursing facility. In addition it only covers intermittent and recuperative care at home. The first 20 days in a Skilled Nursing Facility (SNF) are covered in full if you have 3 days prior hospitalization or in a hospital “3 mid-nights”. The next 80 days are covered partially by Medicare and partially by your Medicare supplement. Medicare does not cover custodial care such as personal grooming and assistance.
How does a long-term care insurance policy work?
(A) There are three elements to a long-term care insurance policy consumers need to be made aware of.
1. The Elimination Period – This is the waiting period before the policy begins to pay the benefits. The waiting period can be anywhere from 0 to 180 days. The benefit of electing a longer waiting period is to reduce the price of the policy. During the elimination period, the insured bears the cost of care unless Medicare pays.
2. The Benefit Period - The next element of a long-term care policy. This is the amount of years that the policy will pay out for. The range of benefit periods is 3 years to unlimited
3. Daily Benefit - The range is $50 to $300 per day.
At what age should I buy a long-term care policy?
(A) The cost of long-term care policy is based on age and health. The younger you are, and healthier you are, the less expensive policy is. Many young people are seeing their parents pay expensive premiums for their policy because they waited until they were much older to purchase the policy. Part of the strategy to buying a long-term care insurance policy, is to buy a when the premium is affordable so you that even in retirement you can afford to pay the premiums. Needless to say, at the younger ages the premiums are very affordable. Since there is no way to tell at what age you may incur an illness or injury, the policy will pay no matter what your age.
How do I know which policy is right for me?
(A) The best approach to finding a long-term care insurance policy that is right for you is to work with a certified financial planner who has the ability to shop around and compare different companies and their pricing. By utilizing the SilverCensus.com directory of Long-Term Care Insurance Agents you can locate an agent appropriate to meet your needs.
If you have a lot of pre-existing conditions can you still qualify for a long-term care policy?
(A) The answer is that if the pre-existing conditions are not recent and serious, most insurance companies realize that at a later age people will have existing heart, arthritis, diabetes and other illnesses acquired. As long as disease types are controlled, there is still an opportunity to get a policy. The whole idea is not to wait to the last minute in and run the risk of being turned down.
Do the rates ever go up on existing long-term care insurance policies?
(A) An insurance company cannot raise your rates as an individual. In order for insurance companies to increase the rates on your policy, they would have to get permission from the Florida Department of insurance and raise the rates on everybody in the State of Florida on that type of policy. It is best to deal with top-tier companies. Financial stability is important. Also, it is important is to learn whether the insurance company that you are interested in, has a history of raising rates.
Is prior hospitalization required for long-term care insurance policies to work?
(A) Hospitalization is not required for long-term care insurance to work. On some older policies, that was one of the criteria. If you have an older policy, it's always best to do an annual review to make sure that you understand how to qualify to receive benefits and if your coverage is adequate.
How does inflation factor into a long term care policy?
(A) With the cost of care continually escalating based on the Consumer Price Index (CPI), adding an optional inflation rider to your policy is a great idea if you can afford it. This allows your policy to grow as you get older, yet the premium stays the same. If you can't afford to add the additional inflation rider to your policy, some companies allow people to increase their coverage every three years at their option.
How long of a benefit period should I consider when purchasing a long-term care insurance policy?
(A) The rule of thumb is the younger you are the longer the benefit should be. This is based on the fact that if something should happen to you while you're still young that the policy does not run out. Some people seem to think that after a short time of receiving long-term care that they will die. Normally that is not the case. For example, take the situation where your legs get bad; you may just need somebody perhaps to help you get around. This condition will not kill you; however, you will be disabled possibly for the rest of your life. The bottom line is to buy the longest benefit period that you can financially afford.
If I am wealthy, do I really need a long-term care insurance policy?
(A) Long-term care insurance is a great estate planning tool. If one of your goals is to protect your assets for your children, long-term care coverage is a great idea. Secondly, if you have a good insurance agent that is connected to your long-term care insurance policy, he/she can take care of a lot of the responsibilities that you may not be in your right mind to take care of during a health care setback. For example, making certain such things like the claims are paid is critical, arrangements for custodial care, and contacting family members. Once again, if you are living alone and your adult children are living in another state, it may make good sense to have a long-term care policy. Peace of mind some times can be the best medicine during a health care setback and can relieve pressure off the entire family.
If I have a long-term care policy that I bought in New York and now live in Florida, can I use it anywhere in the United States?
(A) The answer is yes. If you decide you want to be close to your family, and they live in another area in the United States, you can take your policy and can use it in their house or can move into an assisted living facility near your children.
Is long-term care insurance the same as disability insurance?
(A) Long-term care insurance is not the same as disability insurance. Disability insurance pays a recipient income while you are disabled. Long-term care insurance pays for your care during the disability.
How does long-term care insurance protect my life savings?
(A) The only things that can ruin your retirement plan are bad investments, or a long-term care situation. If you do not have a policy to cover long-term care, you may be in a position where you cannot spend your money in retirement because you made need it for an illness that may or may not happen. The policy frees you up to spend your savings and enjoy your retirement instead of having to save it for an illness.
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