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Long Term Health Care Insurance: The Answers You Need

Why should I invest in something I may never need?

You may indeed be lucky, but latest statistics show that 6 of every 10 people currently over the age of 65 will need some form of long term care before they die. It's better to have it and not need it than to need it and not have it.

I thought Medicare paid for nursing home care.

It does...up to a point and under certain conditions. Medicare pays for 100 days of "skilled care only" in a nursing home, (after hospitalization) and you have a copay for 80 of those days. Fewer than 8% of the people in a nursing home are there for skilled care. The rest receive custodial or intermediate care which Medicare does not cover at all.

What good will it do to have Long Term Care if I just want to stay home? A long term care insurance policy can cover both home care and assisted living care, unlike either Medicare or Medicaid. In short, you have a lot more choices. Most policies will even help train a family member if that person is willing to participate in your care at their own cost. Then you can use the insurance as back up and make it last a lot longer.

So what if I don't have LTC. Won't the government pick up the tab?

Yes, they will, after forcing you to "spend down" your assets. That means spending your retirement, your savings, and, in some states, turning the deed to the family home over to the state. If you have a LTC policy, the state will not freeze your banks account and other assets in return for providing care.

What types of illnesses does LTC cover?

A good policy will cover any illness requiring long term care. At one time, cognitive diseases like dementia and Alzheimer's disease were excluded, but recent federal regulations have virtually eliminated such clauses. A few companies also have pre-existing condition clauses, so discuss the terms with a qualified and knowledgeable agent.

How can I tell how much a LTCi policy will pay?

The payment terms of the basic policy are based on a daily benefit, a period multiplier, and an elimination period. The daily benefit is the per day amount that you select and should be at least as much as nursing homes in your area are charging today. The multiplier is a time period beginning with 365 days and going to "infinite." An infinite policy means that from the time you become ill, that daily benefit will always be available, no matter how long you have to be cared for. Often an infinite time period is very little more—and sometimes even less—than a five year plan. The most common is a three year plan, or 1095 days.

What is the elimination period?

The elimination period can be thought of as a time deductible. When you first need care, you will have to pay for the first 30, 60, 90, or even 180 days out of your own pocket. The elimination period is your choice; a longer elimination means a lower premium. However, if you take a long elimination period, you need to plan how you will pay during that time. Most companies give you a week's credit for only 3 or 4 days of care at home, which shortens the elimination period for you, but if you need care in a nursing home, the policy will not pay until the exact number of days in the nursing home have been paid for.

Are there certain things that won't be paid for?

That will depend on the company and the terms of your policy. A good policy will cover things like rental of hospital equipment, transportation to doctor's appointments, activities and transportation to a day care center and a host of other services. If you find that nearly every additional service requires that you pay for a rider, look a little further before purchasing the insurance.