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Questions to Ask About Long-Term Care Insurance

Saturday, April 14 2012 6:51 AM

Long-term care insurance is coverage that helps pay for care that is not typically paid for by health insurance, Medicare or Medicaid. Depending on your health insurance and/or eligibility for Medicare or Medicaid, these could include services such as home care, respite care, hospice, assisted living, adult day services, Alzheimer’s care or nursing home care.

According to the 2010 U.S. Census, 70 percent of people over 65 will require some type of long-term care service at some point in their lives. Long-term care is not just utilized by those 65 and older. The U.S. Department of Health and Human Services estimates that 40 percent of people using long-term care services are between the ages of 18 and 65. There are varying opinions about the best time to purchase long-term care insurance, but most experts recommend purchasing a policy between the ages of 40 and 60. You may find it difficult to purchase a policy if you wait until you need long-term care services.

The cost of long-term care insurance depends on your age, health status and the services you would like the policy to cover. The younger you are when you buy long-term care insurance, the cheaper the insurance premiums.

Here are some things to ask when looking into a long-term care insurance policy:

  • What is the maximum benefit of the policy? In other words, how long will the policy cover services: 1 year, 10 years, your lifetime? Does the policy have a lifetime maximum amount it will pay out?
  • What type of long-term care settings will the policy cover? Think about where you envision yourself living in the future (your current home, a retirement community, an assisted living community). Make sure the policy will help cover services in those settings. Typical policies cover a variety of settings, including home, assisted living, adult day services, Alzheimer’s care, nursing homes and hospice.
  • Ask what services the policy covers in each setting. For instance, some policies will only cover a certain level of assistance and/or a pre-determined number of services. Other companies may not start paying for services until a representative of the company completes an evaluation to see if you meet the requirements of the policy.
  • Ask if there is an elimination period with the policy and, if so, how long is it? An elimination period is an amount of time in which you pay for services out of pocket before the policy begins paying.
  • Is the policy tax qualified? In other words, make sure you know whether or not the insurance premiums are tax-deductible and if the benefits will be taxed.  

Another option for long-term care insurance is a state long-term care insurance partnership program (LTCPP) between state Medicaid and private long-term care insurers. This partnership allows individuals to retain more assets than would otherwise be allowed under Medicaid. Partnership policies have to meet certain requirements, and not all long-term care insurance agencies are licensed to sell them.

Having long-term care insurance to help offset the cost of long-term care services is important. It may be helpful to talk to a financial advisor and develop a plan for paying for potential long-term care needs.

By Gabrielle Hoing
Private Duty Home Care Manager
Source: www.good-sam.com

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