Long Term Care Insurance

Purchasing long term care insurance is a serious consideration with the ever rising cost of home health care and nursing home care. Declining health and unforeseen circumstances can sometimes necessitate extended care coverage even before you qualify for retirement.

Buying long term care insurance makes sense especially if you have a pre-existing degenerative condition that may require at-home or nursing home care at some point in the future. It is important to note that Medicaid does not provide this type of coverage. Extended care must be purchased separately through an independent carrier. You may want to start by looking at your current insurance, as many carriers offer extended care along with their standard benefits package.

Purchasing extended care to supplement your current insurance is a serious decision and requires a significant amount of research. Further compounding the issue is the fact that there are no standardized terms for long term care. For example, some policies only pay a certain dollar amount for each day of care received, while others pay a percentage of the costs. If purchasing the latter, make sure the percentage covered will rise with inflation.

Since you will most likely be paying for this supplemental policy out of your own pocket, it is probably a good idea to have a legal representative review the fine print. You want to be sure you receive the most value for your dollar. Benefits covered by long term care, such as nursing home expenses, home health aides and physical rehabilitation may be stipulated differently by varying policies.

As stated before, since long term care insurance is not standardized, it can be difficult to objectively evaluate extended care policies. Here is a brief checklist that you can use to get the research process started:

• Will you need benefits immediately? Keep in mind that many companies stipulate a 90-180 day waiting period before benefits kick in.
• Does the policy have an “ADL” criteria? A long-term care policy should provide benefits if the individual is unable to perform the “Actions of Daily Living” such as cooking, dressing and bathing.
• How does the policy differentiate between skilled and unskilled care? There is a difference between a home health aide and a trained nurse. Typically, skilled nursing care is more expensive than care provided by a home health aide. You need to know how your policy will handle both situations.
• How long will the policy provide benefits? Depending on the status of your health, you can determine how long your benefits period will be. Be careful to take into account the possibility of a relapse or reoccurrence of conditions that will necessitate extended care.
• In what type of facilities do your benefits apply? For example, some companies will cover your care only in a nursing facility, while others will provide coverage for at-home care. Other agencies will provide care in certain types of nursing facilities, depending on the size and services offered by that institution.
• What are the conditions for renewing the policy? Consider that premiums will be much less when you are in good health. If your physical condition degenerates and you need to renew your policy, you may find yourself with much higher premiums than before.

There are many loopholes when it comes to long term care insurance. In fact, undercover investigations in several states have revealed some very unsavory situations. Fear of losing financial independence and physical mobility has made senior citizens vulnerable to unscrupulous insurance agents.

There are several methods used to coerce older adults into purchasing bogus long term care insurance, including:

• Playing upon the negative image of nursing care facilities. According to these agents, seniors can protect themselves against a potentially abusive situation by purchasing extended care. However, in reality, the coverage is much less expansive than initially presented and subject to a rigorous qualification process.
• Another falsehood purported by unethical agents is that a doctor’s note is the only qualification necessary to access benefits. In actuality, a committee of “gatekeepers” must review benefits before a single penny is even paid out.

Being aware of potential scams is the first step to self-protection. Do not allow an insurance agent to pressure you into signing up for coverage. It is always important to take the time to understand a policy carefully. Ask all questions before you sign. It is also a good idea to have the policy reviewed by a lawyer or other trusted professional.

While most of us think of long term care as a concern of the elderly, it is wise to look into coverage before you think you need it for a couple of reasons:

• The younger you are when you apply for coverage, the lower your premiums. In the same vein of thought, by finding coverage now, you can qualify for lower premiums than if you wait until your health begins to degenerate.
• Accidents, unexpected illness, and genetic predisposition to certain conditions may require extended care long before you qualify for a senior citizen discount.
• The cost of long term care, combined with the loss of income during and extended recovery period can drain you monetary reserves quickly, and this can be prevent at a minimal premium cost.

The bottom line is that extended care can be an excellent investment for you and your loved ones. However, allowing yourself to make a hasty decision is never a good idea. Take time to read all of the fine print and ask as many questions as necessary. With proper research, long term care insurance can provide much-needed security and financial protection.

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