Understanding the Moving Parts of Long Term Care

Posted by Matt Simon on Aug 1, 2010

Almost 70% of those over the age of 65 in America will use some sort of long term care during their lifetime.

With those sorts of odds, it makes sense to understand the basics of long term care insurance and the range of features to choose from.

First, long term care is defined as assistance given to those who have a chronic illness or disability that interferes with the ability to perform the Activities of Daily Living (ADL).

What are the ADLs?

  • Bathing
  • Toileting
  • Eating
  • Ambling
  • Dressing

How does insurance fit in?
Long term care insurance is insurance that you purchase when you are healthy in order to cover the expenses associated with long term care in the future.

For most people, long term care provides a freedom to choose the care they receive. Unlike Medicare options, private insurance generally provides set daily limits without regard to where you receive care. This means you can get care at your chosen facility or with a caretaker at your home.

What do you need to consider?
First, of course, is the expense. Long term care, since you are likely to use it, simply costs more than other insurance.

If you have enough to cover eventual costs that range from $70,000 to $100,000 each year then you can self insure and avoid long term care insurance.

Premiums are likely to be in the $200 per month range for a healthy adult in their 50s.

The other important variables to consider in each policy are:

Exclusion period: The number of days or months you need to wait before the insurance starts.
The daily limits: Policies differ greatly on the amount that is allowed per day.
Lifetime limits: Many policies stipulate a maximum lifetime benefit to you. This is very important.
Inflation: Some policies account for the rising costs over time and guarantee that your daily limits increase each year to account for inflation.

Long term care is an important decision and one well worth discussing with your insurance and financial advisor.

All of us here at Hill & Hamilton wish you many healthy years to come.

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Category: Health Insurance (2), Long Term Care Insurance (2)