Long Term Care Insurance – The Basics

What is Long Term Care?

Long term care is a combination of services directed toward meeting the needs of someone who, due to reduced physical functioning and/or reduced intellectual functioning is unable to carry out every-day tasks without the help of another person.

Long term care goes beyond medical and nursing care to include all the assistance you could need if you ever have a chronic illness or disability that leaves you unable to care for yourself for an extended period of time – generally over 3 months. You can receive long-term care in a nursing home, assisted living facility, or in your own home. Though older people use the most long-term care services, a young or middle-aged person who has been in an accident or suffered a debilitating illness might also need long-term care.

Beyond nursing homes, there is a range of services available in the community to help meet long-term care needs. Visiting nurses, home health aides, friendly visitor programs, home-delivered meals, chore services, adult daycare centers, and respite services for caregivers who need a break from daily responsibilities can supplement care given by family members.

Planning for Long Term Care

Planning for long term care means thinking ahead and being prepared for the consequences of needing long-term care.

No one likes to think of the possibilities of becoming frail or needing the help of family members or professionals just to carry out day-to-day activities. Many older people and their families find it very difficult — or impossible — to talk about frailty or dependency and the financial and other consequences of needing long term care. As a result, they delay thinking about long-term care, learning about long-term care or preparing for long-term care.

However, to protect yourself and your family, you need to think about, learn about, and prepare for these possibilities. When you are planning for the possible need for long-term care, you need to think about your own preferences for receiving services and your own financial situation and goals. One choice is to not plan. But that is likely to lead to undesirable consequences for you and your family.

What is Long Term Care Insurance?
Long term care insurance is an insurance product which pays for long term care services in many settings, such as at home, a nursing home, assisted living facility, and adult day care facility.

Many people elect to buy long term care insurance so they will not need to deplete their savings should they need long term care services. Long term care insurance can help ensure that financial resources and support are in place when you need them.

How Does Long Term Care Insurance Work?
First, you must apply for coverage. If you are approved for coverage, pay your premiums, and you meet the insurance carrier’s criteria for benefit payment, you will be reimbursed for covered long term care services up to the amount of daily benefit after you satisfy the waiting period in the insurance policy (most policies do not pay benefits until after a waiting period, commonly called an elimination or a deductible period. That means benefits begin 20, 30, 60, 90 or 100 days after you are admitted to a nursing home. Some policies have no elimination period and they naturally cost more).

Why should you consider Long Term Care insurance?
Long term care insurance can help you safeguard your assets and protect your financial stability and is a critical tool in helping you with the high cost of long term care services.

  • Protect your family from the catastrophic costs of long term care
  • Remain in control of your assets

Did you know…

  • At age 65, people face at least a 40% risk of entering a nursing home at some point in their lifetime and about 10% will have a stay of five years or longer.
    (Source: AHIP, A Guide to Long-Term Care Insurance, 2003)
  • Because women generally outlive men by several years, they face a 50% greater likelihood than men of entering a nursing home after age 65.
    (Source: AHIP, A Guide to Long-Term Care Insurance, 2003)
  • The average daily rate in 2004 for a private room in a nursing home was $192, an increase of 6% from 2003.
    (Source: 2004 MetLife Market Survey of Nursing Home & Home Care Costs)
  • The average length of a nursing home stay is about 2.4 years.
    (Source: CDC/NCHS Health Care in America; U.S. Department of Health and Human Services; January 2004)
  • At an average daily rate of $192, an average nursing home stay of 2.4 years costs about $168,000, making it virtually unaffordable for many Americans.