When it comes to your health, you don’t have a crystal ball to look into the future, but most Americans are living longer and healthier lives thanks to advances in medicine and preventive care. While that is welcome news, it also means there is an increased risk of living with a chronic health condition that will require extended care. With the average private-pay nursing home stay costing $80,000, a long-term care insurance policy allows you to offset the high cost of extended care due to accidents, illnesses or advanced age while protecting your personal assets
What is long-term care and who needs it?
Long-term care refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period of time. Whether you need long-term care insurance depends on your age, health status, overall retirement goals, income and assets.
How does long-term care differ from disability insurance?
Although long-term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long-term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury, and not the care. The policyholder will then have to pay out-of-pocket for any ongoing long-term care due to his/her accident or injury. In addition, Medicare should not be considered a resource for handling any substantial long-term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days. This will not suffice, as long-term care can be expensive.
A long-term care insurance policy covers any or all of the following types of services:
- Nursing home coverage
- Assisted living facility coverage
- Adult day care center coverage
- Home health care coverage
- Personal care coverage
Most policies pay a daily maximum benefit and a lifetime maximum benefit. Actual benefits are chosen at the time the policy is purchased. The daily maximum benefit for most long-term care insurance policies is usually less than the cost of one average day of long-term care service.