Buying LTC Insurance

Long term care is medical care and assistance for an extended period of time and includes care in a nursing home, assisted living facility, and care in your own home. A study by the U.S. Department of Health and Human Services found that Americans aged 65 and older have at least a 40% chance of needing nursing home level care. And while older people have a higher likelihood of needing long term care, someone of any age can face the need for long term care due to an accident or chronic illness.

The Cost of Long Term Care

Nursing home and assisted living costs vary by state. In Idaho, a nursing home stay will generally cost $50,000-$60,000 per year (largely depending on which area of the state you reside in). The average cost of an assisted living facility is $30,000- $32,000 per year. The cost of in home care varies depending on the number of hours per week the care provider comes to your home. As an example, 25 hours of care per week would cost $22,000-$29,000 per year.

Long Term Care Insurance

Long term care insurance can be purchased as part of a group policy through your employer, or you can purchase an individual policy. Policies vary widely in what they cover, costs, and other specifics such as lifetime caps. It is therefore very important to do your homework and shop around before purchasing a policy.

There are generally three types of long term care policies: indemnity, expense incurred, or integrated/pooled policies. An indemnity policy pays up to a capped total benefit amount. An expense incurred policy reimburses you a fixed amount per day, week, or month. A pooled policy has a total lifetime cap as well as a daily, weekly, or monthly limit. Daily benefit caps generally range from $50-$300. Many policies also include automatic inflation increases for your cap.

Long term care policy costs vary widely depending on the specifics of your policy. The cost also varies depending on your age when you purchase the policy. For example, a typical policy purchased at age 50 may cost $800 per year, but if you are 65 when you purchase the same policy, the cost could double.

Coverage

In order to determine whether a person needs long term care, an analysis is done of what activities of daily living—such as bathing, dressing, toileting, and eating—a person needs assistance with. When it is determined that long term care services are needed, a policy can cover skilled, intermediate, custodial, or home care services. Most policies cover care in assisted living, adult daycare, home care, and respite care. Some policies also cover alternate care plans, which are nonconventional service plans developed by a health care practitioner as an alternative to nursing home care.

Before You Buy

• Most companies will only sell long term care policies to people aged 18 to 84.
• Long term care policies usually have a maximum lifetime dollar limit or a maximum number of days of coverage.
• Some policies allow a waiver of premiums during the time you are receiving benefits-read your policy carefully to determine if this benefit is offered.
• You will be required to complete a full medical history disclosure in order to obtain a policy.
• Make sure your policy includes, at a minimum: one year of long term care benefits, coverage for Alzheimer’s disease, inflation protection, a guarantee that the policy cannot be canceled or nonrenewed because you get older or have deteriorating health, a right to cancel the policy within 30 days, and no hospitalization requirement prior to receiving benefits.
• Read your policy carefully before you buy it. An insurance policy is a legal contract and should be reviewed with an attorney or with friends and family prior to purchasing.

Long Term Care Partnership Program

The Idaho Long Term Care Partnership Program was established to encourage people to purchase long term care insurance. Under the program, the State will allow you to keep more of your assets, the amount equal to the benefits paid out by your insurance policy, and still qualify for Medicaid. For example, if your long term care policy pays out $50,000 in benefits, Medicaid will disregard $50,000 in assets in determining your Medicaid eligibility. The most important point to remember about the Partnership Program is that only certain long term care policies qualify. It is important to check with your insurance agent and/or the Idaho Department of Insurance to ensure that the policy you are considering qualifies for the program before you purchase it. A list of companies offering long term care insurance in Idaho can be found at http://www.doi.idaho.gov/company/LTC_companies.aspx.