Long-Term Care Insurance
Long-term care refers to the type of personal care services you need if you become unable to care for yourself because of a loss of functional capacity or cognitive impairment. Long-term care is different from traditional medical care that treats physical problems directly in an attempt to permanently cure or control them. Long-term care services help seniors, people with disabilities, or people with injuries or illnesses perform normal daily activities. These services could include personal assistance or custodial care and skilled care provided in a home, an adult day care center, a nursing home, or an assisted living facility.
Most long-term care costs are paid by Medicaid, a federal-state assistance program for people who qualify. People with low incomes may already qualify for Medicaid, and those with moderate incomes may be able to "spend down" their assets to qualify.
Medicare may pay some long-term care costs. Medicare is a federal program that pays for health care for people over age 65 and for people under age 65 with disabilities. It covers the cost of some skilled care in approved nursing homes or in your home in certain situations. Medicare also might cover some custodial care in your home if you are receiving skilled care.
If you don´t qualify for Medicaid or Medicare, you´ll either have to pay your long-term care expenses out of pocket, with a long-term care insurance policy, or by some alternative means.
Long-term care insurance isn´t right for everyone. Consider your options carefully before buying a policy. Long-term care insurance is probably not right for people with fixed or low incomes and may not be right for people with moderate incomes who could spend down their assets to meet Medicaid eligibility. You also probably don´t need long-term care insurance if you have significant assets and could pay for a lengthy nursing home stay yourself if necessary.
If you choose to buy a policy, you will need sufficient income to pay premiums for the rest of your life without sacrificing your basic standard of living. Keep in mind that retirement income may not be enough to pay your cost of living over time. You need to be sure you can afford your premiums and still have a cushion for unexpected expenses or future premium increases.
Since long-term care premiums are based partly on your age and health, it´s more expensive to buy a long-term care policy if you are older or in poor health. That means the cost might be prohibitive for some people or you might be declined and unable to purchase a policy.
To determine whether long-term care insurance is right for you, consider your personal risk factors, assets, income, costs, and available alternatives. You can also use the Long-Term Care Insurance Suitability Worksheet to help you decide.
Don P. Baker Financial Group can help you with all of your Long Term Care Insurance needs.