Is Insurance the Answer to Long Term Care Planning?

People are living longer.  And not all those years are golden years.  Many who live longer generally have some sort of disability or need help at some level of living.  Everyone would like to remain at home and the key problem is how seniors can live at home as long as possible, as nursing home costs in Connecticut are easily $130,000 per year.

Long Term Care at any level, in the home, assisted living facility, or nursing home, can add a tremendous cost to seniors and their families.

Government programs such as Medicare, Medicaid and the Veterans Administration Aid and Attendance will cover the cost of long-term care under certain conditions.  Medicare will cover rehabilitation from a hospital stay or limited care at home if there is a skilled (medical) need.  The VA will also cover other forms of home-based or community-based care for a war time veteran or surviving spouse of a war time veteran if there is a medical need.  Medicaid will cover both medical and non-medical related long-term care, but in order to qualify for Medicaid, a person has to have less than $1,600 in assets.  You might be able to fund long term care with your life insurance policy.  Drawing cash from life insurance or changing a life insurance policy should only be done after reviewing with an expert advisor.  Loss of the policy and its death benefit could prove to be a detriment.  If, however you have accumulated cash in a life insurance policy and no longer need the coverage, you may consider using the cash for long term care or purchasing a LTC rider to your current policy. 

 New insurance products are being developed to cover both life insurance and long term care insurance.  ElderLawAnswers reports that “A new law makes the purchase of products that combine annuities or insurance policies with long-term care insurance more attractive.  These “hybrid” products are gaining in popularity due to a law that went into effect January 1, 2010, making distributions from life insurance and annuities tax-free when used to pay for long-term care.  The same law also allows owners of annuities or life insurance policies to exchange their old policies for long-term care insurance or hybrid policies without being taxed.”

Combination sales which include life insurance, annuities and traditional long-term care coverage are starting to be offered by insurance companies and may provide a method of financing long term care.  Investigate closely, however, to find exactly what will be covered.  Some policies do not cover home care costs or complete costs of nursing homes.

 The first long-term care policies were offered about 40 years ago.  These were primarily nursing home-only policies designed to take over when Medicare rehabilitation ran out.  They were not the comprehensive benefit policies we see today. 

 Long Term Care Insurance policies today can cover home care, nursing home costs, adult day care, physical therapy, skilled and non-skilled nursing care.  Policies vary in price and what they cover.  There is also a very restricted qualification of physical and mental health to get a policy.  Purchasing a policy at a younger age makes it easier to qualify and also provides cheaper premiums.  It is best to consult with a long term care insurance professional about the type of policy that fits your needs and budget.

 The saddest cases of long term care needs we hear are:

 “Mother can no longer live alone and she has no money to go live in a care facility.”

“Is there someone that can come help me take care of my wife?  We live on our Social Security and I cannot pay what home care costs.”

It is important to make the necessary arrangements to cover long term care.  There is no government program that will cover all those needs.  The National Care Planning council at www.longtermcarelink.net strives to educate people about long term care services and encourages the planning that needs to be done to prepare for future costs and needs.