Long-Term Care: It’s Not What You Think

More and more frequently, our clients are asking us about long-term care.  They know they need to start thinking about it, yet they cringe as they utter the string of four-letter words, and invariably picture a sad and dreary nursing home.  Yes, long-term care insurance does cover nursing home expenses, but it’s so much more than that. In addition to nursing home care, most long-term care insurance policies pay for home modifications, skilled nursing, in-home care, assisted living, adult day care, and hospice care, and help with many day-to-day expenses such as transportation, meal services, and household chores.  A policy owner qualifies for benefits when they can no longer perform two out of six Activities of Daily Living, or ADLs: bathing, dressing, toileting, transferring, eating, and continence.  As you can imagine, having an insurance policy that covers these expenses takes a tremendous amount of pressure off of both your family and your retirement portfolio.

Many people believe that Medicare or Medicaid will cover these services.  Medicare does not cover long-term care expenses, period.  Medicaid does, but only if you are destitute.  In order to qualify for Medicaid, you must spend your assets down until all that remains is your primary residence, one vehicle, and $2000 in liquid assets.  That doesn’t leave a lot for your heirs, and it places you at the mercy of a government entitlement program that’s in serious financial trouble.

Long-term care insurance does two very important things: it gives you choice and control over your care, and it protects your hard-earned assets.

Here are some interesting statistics about long-term care:

  • 70% of people will have a need for some level of long-term care during their lifetime
  • 80% of claims currently being paid are for home health services
  • 40% of claims are being paid out on people between the ages of 18 and 64
  • 50% of people being cared for by a family member will outlive their caregiver

Long-term care insurance is not appropriate for everyone, but perhaps it’s time to start thinking about whether it’s appropriate for you.