Aging baby boomers are greatly influencing the delivery of health and long-term care services in this country. By 2030, seniors will comprise 20 percent of the population — doubling from 35 to 70 million people. With advances in medicine and lifestyle changes, Americans are living longer.
As boomers age and face chronic illness and disability, they are demanding increased and more innovative long-term care choices. Those over 65 face a 40 percent risk of entering a nursing home for long-term care.
Long-term care, also known as custodial care, helps a person maintain a normal lifestyle as they age by aiding them with everyday tasks, such as bathing, dressing or eating, that they may no longer be able to perform by themselves. It also includes care that seniors may require if they have a cognitive impairment, such as Alzheimer’s disease or dementia.
While many aging Americans will need long-term care, they don’t always comprehend the high costs or prepare for the expenses of such care. In recent years, long-term care insurance has offered a solution to the problem. Long-term care insurance helps people with disabilities or chronic illnesses pay for services beyond medical care and nursing care without jeopardizing their income, retirement savings and other investments.
Many believe that long-term care is covered by a health or disability insurance, Medicare or Medicaid. However, that is not typically the case.
Health insurance covers medical expenses for illnesses or injuries such as cancer or a broken leg. It will not pay for long-term assistance with activities of daily living, such as eating or dressing.
Disability insurance is designed to replace lost income in the event a person is unable to work due to accident or injury. Disability benefits will help to pay the person’s mortgage or normal household expenses, but does not provide compensation for long-term care expenses.
Medicare pays limited amounts for skilled care following a hospital stay, but does not cover custodial care. Medicaid may pay care costs for seniors with minimal assets. However, if a spouse’s assets will support care, qualifying for Medicaid benefits is usually not possible.
Because of the growing costs of long-term medical care and the inability of health insurance and Medicare to cover the costs, an increasing number of Americans are finding long-term care insurance to be a solution. Including a reasonable long-term care policy in financial planning ensures an individual is able to protect their savings, maintain their quality of life and manage the potential financial burden of care during a long illness or period of disability.
Comprehensive long-term care insurance includes benefits for all levels of care, from custodial to skilled. Several options exist for these policies and most allow individuals to choose the amount of coverage they want, as well as how and where they can use their benefits.
Insurance agents and brokers, some financial planners and even continuing care retirement communities offer long-term care policies. Regardless of where long-term care insurance is purchased, be certain that the policy provides a few certainties.
Effective long-term care insurance should not require hospitalization to receive benefits. It should also be guaranteed renewable as long as the premiums are paid, but be sure the policy offers a premium waiver while receiving benefits and has only one deductible for the life of the policy. It should cover pre-existing conditions without a waiting period, provided they are disclosed when applying for the policy.
Additionally, a good long-term care policy should allow coverage to be upgraded or downgraded if the person’s ability to afford premiums changes. Individuals must be wary of purchasing a long-term care policy if paying for the premiums means lowering their standard of living or giving up other things they need.
When considering long-term care insurance, an individual should buy it while they are still insurable, before illness or disability strikes.
As people age, it becomes increasingly important to prepare for the future. As part of a well-considered financial plan, long-term care insurance helps to minimize dependence on other family members, control where and how long-term care services are received and protect personal assets.
June Connelly is the executive director of Las Ventanas retirement community.