1. What is long-term care?Long-term care refers to the ongoing services and support needed by people suffering from chronic health conditions or disabilities. There are three levels of ongoing care someone might receive:
- The first level of care is skilled care, which is generally round-the-clock care provided by professional health-care providers such as nurses, therapists, or aides under a doctor’s supervision.
- The next level of care is intermediate care, which is also provided by professional health-care providers, but on a less frequent basis than skilled care.
- The third level of care is custodial or personal care, which is often provided by family caregivers, nurses’ aides, or home health workers who provide assistance with what are called “activities of daily living” such as bathing, eating, and dressing. This is the most common type of long-term care.
All three levels of care can be provided in many different settings, including your own home, an assisted-living facility, or a nursing home.
2. How do I know if I will need long-term care?Statistically, 52% of people turning age 65 will need some form of long-term care (
U.S. Department of Health and Human Services, February 2016).
It’s hard to face the fact that our health might decline. Nevertheless, statistics suggest that the risk is greater than we think. Approximately half of us will need some type of long-term care services during our lifetimes at some point after we reach age 65. Although it’s great that people are living longer, a long life span increases the chance of developing serious health problems. In fact, according to the Alzheimer’s Association, one in nine people age 65 and older has Alzheimer’s disease, which often leads to the need for nursing home care. While older people are more likely to need long-term care, younger people may need care too, because of a disabling accident or illness such as multiple sclerosis or Parkinson’s disease.
3. Where can I receive long-term care? There are a few options for where you might receive care.
If you want to stay in your own home for as long as possible, family caregivers, friends, or trained homemakers may be available to provide the bulk of assistance with everyday tasks, and professionals such as nurses, therapists, and home health aides can provide occasional home health care.
Another long-term care option that has become very popular is assisted living. These facilities are usually home-like facilities that combine housing, personal assistance, and limited health care. Generally, assisted-living facilities offer intermediate and custodial care round-the-clock, but not the skilled care a nursing home provides. This option may be ideal for someone who can’t continue to live alone but who wants to remain independent.
The third option, adult day-care facilities, are community-based centers that provide health care and social services for people who can’t be left alone. Often, adult day-care facilities specialize in caring for people with Alzheimer’s disease, and they especially benefit family caregivers by providing a few hours of much-needed respite care during working hours or on the weekend.
The last option, nursing homes, generally offer all three levels of care: skilled care, intermediate care, and personal care. Most nursing home residents have disabling illnesses, including cognitive disorders, such as Alzheimer’s disease, that are so serious that these individuals cannot be adequately cared for anywhere else.
4. How do I pay for long-term care?There are three basic options for paying for long-term: Paying out-of-pocket, relying on government programs such as Medicare or Medicaid, and buying long-term care insurance.
Paying out of pocket does allow more freedom to choose care and is ideal if you can afford to pay for care indefinitely. However, you must be willing to liquidate assets if necessary, it may impact your ability to pass assets on to family, and relying on family members or government assistance may be your only option if you run out of money.
Medicare is a federal health insurance that provides only a limited coverage for long-term care services. This option does not pay for personal or custodian care and home health benefits are limited. Medicaid is the largest public payer of longer-term care services in the country. To qualify for Medicaid, you have to either be poor or become poor. Once you qualify for Medicaid, you’ll have little or no choice regarding where you receive care. Only facilities with Medicaid-approved beds can accept you, and your chances of staying in your own home are slim, unless your state’s Medicaid program covers home health care.
Long-term care insurance is private insurance that pays benefits if you need extended care. Like other types of insurance, long-term care insurance protects you against a specific financial risk--in this case the chance that long-term care will wipe out your life savings. While paying out-of-pocket may be ideal if you’re wealthy, and relying on Medicaid may be an option if you’re poor and you can qualify right away, long-term care insurance is an alternative that is especially valuable for middle income Americans who want to preserve their financial independence and quality of life.
No matter what your income level, long-term care insurance gives you the freedom to choose where you receive care. A comprehensive long-term care policy will cover home care, assisted-living centers, adult day-care centers, and nursing homes. If you need nursing home care, you’ll have a wider choice of facilities than if Medicaid was paying for your care, since many nursing homes give preference to patients who can pay for their own care.
Long-term care insurance can also help you preserve the assets you’ve accumulated. With insurance covering most of the bill, not all of your savings will be spent on long-term care.
An alternative to traditional standalone long-term care insurance, hybrid policies generally link life insurance with long-term care insurance. Hybrid policies are designed for people who are looking to get something back, are able to reposition some of their assets, those who do not want their premiums to increase, and people who may not get sick.
5. Who is buying long-term care insurance? The profile of a long-term care insurance buyer has changed dramatically over the last 5 years, but what hasn’t changed is that buyers of long-term care insurance are “planners”.
At one time, buyers were in their mid to late 70’s. Today, many buyers are younger than the youngest Baby Boomers.
Buyers today are more affluent than in prior years as the coverage has gotten more expensive due to what we know now is more responsible pricing than when it was first introduced.
Long-term care insurance buyers are those who:
- Want to protect their assets
- Do not want to be a burden to their family
- Want to leave a legacy
At its core, long-term care insurance buyers are people who are willing to pay a premium to transfer the risk to the insurance company to gain peace of mind.
Connect with one of our Financial Planners to better understand if long-term care insurance may be the right fit for you and your family.
Financial planning and investment advice are offered through Sentinel Pension Advisors, Inc. (SPA), an SEC registered investment advisor. Investment brokerage services offered through Sentinel Securities, Inc. (SSI). Member FINRA & SIPC. Sentinel Benefits & Financial Group is the brand name for the Sentinel family of companies, which includes SPA and SSI. This article is not intended to be exhaustive nor should any discussion be construed as legal or financial advice.
