Self Assessment Guide For Long-Term Care and LTC InsuranceLTC). The keyword here is "need," and not "want".
It is not a matter of desire but necessity. On the other hand, regardless of whether we do or do not know if we are going to need it, it is always better to be prepared especially for the expected.
Now that we know the odds of needing long-term care in our retirement age, how about the chances of needing long term care insurance? It's not as complicated as it seems.
Before we rush into getting long-term care insurance, we need to review the basics of LTC first. What is the point of going through all this? It's quite simple. Knowing everything that needs to be identified at an early stage can decrease the many hassles brought by panic buying of policies.
These hassles include:
- Not understanding the policy.
- Having issues with the costs such as unaffordable premiums.
- Not going with the right company.
- Not getting the right coverage or services in the policy.
- Paying for a coverage you will never use.
Retiring with a plan
All of us are bound to retire one day. The question is, "What will your retirement be like?"
Many of us fail to anticipate retirement. We often end up relying on our savings. To be fair, there are some who have successfully saved a sufficient amount to support the rest of their retirement. However, these people who have made a large amount of savings are very small in number.
The only way that the average working class can be ready for retirement is by planning ahead, especially with LTC insurance.
Self Assessing is EssentialSelf assessment identifies certain factors that may need attention during retirement. This will point out issues that need to be anticipated. These include such issues as the possibility of experiencing hereditary conditions in late adulthood.
Before jumping into buying a policy, taking notes of several factors will help maximize the coverage.
Here are several questions that one can ask for self assessment:
- Do I know what long term care is?
Many are still under the impression that long-term care is only for retired elders or for people who are too old to take care of themselves. In reality, it is used by people who lack the ability to survive on their own, regardless of age.
These include people with disability, cognitive conditions, and chronic diseases. It is also not composed of medical services only. It encompasses services for activities of daily living or ADLs. It is also not exclusive to medical facilities only and can be received at home.
- Is there a way for me to know if I need it?
There are several factors to observe in order to determine the chances of needing it:
(a) People who live longer are more likely to need it.
(b) Women have been observed to outlive men, which puts them at a higher risk.
(c) Observe the medical history of your family. This can easily identify risks.
(d) The frequency of being hospitalized may indicate the need for LTC.
Some factors may be caused by external events such as acquiring a disease or a severe accident.
- How much will it cost?
Costs depend on the level of the service which is basically divided into medical and non-medical services.
Here are sample figures of costs:
- A year in a nursing home costs from $35,000 to $45,000.
- A day in an adult day care can cost up to $80.
- Home health care can rate from $4 to $7 per hour.
- How will I pay for it?
It can be paid out-of-pocket or through long-term care insurance coverage. The difference is that purchasing LTCI means having an answer to the possible chance of requiring long-term care.
The lack of planning and anticipating is a common mistake made by people in retirement. Most assume that they can survive by relying on their savings, but not being prepared has its consequences.
Identify the Reason to Get Long-Term Care InsuranceIt is important to know the reasons for getting long-term care. Average wage earners choose not to save up for it because it is expensive. However, purchasing LTC insurance can help cut costs through certain protection plans.
There are two common reasons why people get LTC and LTCI:
- To continue living as normal or as independent as possible.
- To protect their loved ones and their valuables like assets or finances.
One of the main beneficial results of receiving long term care is to have the ability to continue living as normal as they used to. They do not want to live too differently even if they are receiving care.
Another is that they prefer to continue living at home rather than in an elder home facility or a nursing home. This lets them keep living normally while receiving care in the comfort of their own home.
Here are some commonly protected valuables:
- Family or loved ones
- Personal health
- Dignity and independence
Most elders prefer to have LTC ready rather than having troubles getting hold of adult care service with lower rates and services that answer their needs.
The Truth about Medicare and MedicaidYou may wonder why in the self assessment questions there wasn't an inquiry about Medicare or Medicaid. The reason for that is these federal programs are technically external assistance and would not comply with self-assessment.
Medicare does not pay for the full costs of long-term care. Instead, what it does is pay for a limited time for recovering from a condition such as a stroke or surgery. Medicare also provides limited assistance for home health services or nursing home costs.
Medicaid helps people pay for health care services once they meet the eligibility requirements which is spending down all your assets and finances to $2,000.
Medicare and Medicaid have helped many people with their medical needs. However, meeting the requirements of Medicaid can be difficult for many and the limited time and help Medicare gives can only do so much.
It is still best to have a plan ready rather than relying completely on these federal programs.
What is Long Term Care Insurance?Long term care insurance may either be an individual insurance policy or a group coverage policy. These policies pay benefits depending on the specifications of long term care services when an eligible claim is made by a client.
Most companies today sell policies that contain combined coverage and benefits in many ways. Insurance companies do not have a standard for policies. No two LTCI policies are ever alike whether from one company or other companies.
Good candidates for owning LTCI are those:
- Who have large assets that need to be protected from being used for paying for long-term care.
- People who wish to protect assets that will be transferred to their loved ones.
- People who have a family history of ending up requiring care to continue living.
- Who can afford the premiums and want to avoid becoming a burden by receiving financial or non-financial help from family and friends.
- People who do not want to spend down their finances or assets to meet Medicaid eligibility.
- Who have no assets or large savings to protect.
- Who cannot afford or maintain premiums. This includes people who need to tap into their savings or assets to be able to afford buying a policy or afford premiums in the first place.
- With severe physical disability. People with such conditions often do not qualify in the medical underwriting to receive coverage.
- Who qualify for Medicaid assistance.
- Who has no one to leave their assets to.
People who have large amount of income or savings who do not want to pay for long-term care decide to get LTCI instead. This gives them independence from family or friend aid and government assistance. As long as a person can afford and maintain the premiums, it would cause no future problems such as financial concerns.
Coverage TypesThere are three common types of coverage:
- Home Health Care
Medical and/or non-medical care is provided in the residence of the receiver of care. Other cases also include assistance with ADLs. Some policies also cover adult day care services.
- Nursing Home
Coverage for nursing home confinement that covers for all kinds of care.
- Comprehensive policies
These policies include both home health care and nursing home coverage. Respite care and hospice services can also be covered by these policies.
LTCI buyers are advised and assisted to identify their future needs. Buyers are evaluated by experts to determine what care may be needed or coverage to get.
Payment MethodsInsurance companies generally pay benefits in two ways:
- Indemnity Method
This policy pays the real dollar amount of the benefit no matter the cost of care. An example would be a $200-a-day benefit; even if the cost of care for the day was only $150 or $250, the policy will only pay $200.
- Expense-incurred Method
This policy pays the actual cost. For example, the daily maximum is $100 but the cost is only $80, the policy will only pay $80. However, if the cost goes beyond the maximum, it will only pay the maximum.
When a daily maximum is not used, the remaining unused amount goes to a pool of money. However, this is not standard to all companies. If a company has a pool of money, a policy may extend its years of coverage if the daily maximum is not used up.
Buyers are advised to ask the payment method of their policy. It is important to know which type of method will suit your needs and maximize your policy.
Tips on Shopping for a PolicyHere's a list of tips that will come in handy when shopping for a policy:
- Do not pay in cash ?? It is safer to pay by check that is payable to the insurance company.
- Do not get multiple policies ?? Trying to get higher daily benefits by getting more than one is not advisable. Talking with the insurance policy about increasing the daily benefits is preferred.
- Don't forget the names ?? For contacts or reference purposes which will come in handy in the future.
- Research about the company or the people you talk with ?? Be sure to check the license of the agent you are making the deal with and the company you will be getting the benefits from.
- Shop through companies ?? Talk to more than one agent and inquire from different companies. This will give you more options and lets you compare the policy that will suit you.
- Do not sign any blank applications ?? Never accept to sign forms that have blanks on items from your part. This is important especially with medical record information.
- Do not accept or sign anything that is unclear to you ?? Even if documents have been presented to you, it is wise to have it reviewed until you completely understand the policy.
- Do not rush into buying a policy and review the details ?? Never buy a policy out of being pressured into it. Have the policy outlined before making the purchase.
By Aris Moreno