Long-Term Care Insurance: Paying for Care

 

For many of us, elder care isn’t just an emotional issue; it’s also a financial one. Of course we want to take care of our loved ones when the time comes, but there are certain practical matters we have to grapple with too. Currently a quarter of adult children, mainly baby boomers, provide personal and financial care to a parent.

Can a loved one provide care or do you entrust care to a professional? How do you know what will be covered by insurance? And regardless of the options you choose, exactly how much will it all cost?

These aren’t easy questions, but they’re urgent ones, especially as our parents and other loved ones age and we watch healthcare costs rise across the board. Let’s address them briefly.

First, before you jump into personally providing care for a loved one in crisis, consider the deep emotional, physical, and financial costs. According to a 2011 study conducted by the insurer MetLife, working Americans who provide care for their aging parents lost an estimated $3 trillion in wages, pension, and Social Security benefits when they took time off to do so.

Regardless of whether you decide to care for your loved one yourself, consider hiring a geriatric Care Manager- one who’s an RN or MSW- to assist with the evaluation, referral, and monitoring of care. Doing so can save you a great deal of time and money and provide quality outcomes.

Second, value is, of course, a subjective term. But armed with a bit of data, you can make more educated decisions about whether the costs you’re seeing are in line with national averages.

COSTS OF CARE: 2012 Annual Rates Based on National Averages

NURSING HOME

  • Semiprivate room $81,030
  • Private Room $90,520
  • Assisted Living Community $42,600

IN-HOME CARE

  • Home Health aide $21,480
  • Homemaker $20,800
  • Adult Day Services $18,200

*Based on four hours per day, five days per week at $21 per hour.

** Based on five days per week at $70 per day

And third, while all the variables make it hard to know exactly what you’ll need, there are some factors to consider when projecting out costs for you or your loved one:

  • General health conditions and disabilities
  • Current age and financial resources
  • Hereditary health risks
  • Lifestyle habits
  • Presence of family who could help with care needs
  • Location of home and possible safety needs
  • Health and long-term care insurance needs

And when you’re planning how to pay for long-term care costs, be sure to consider all resources, including:

  • Social Security
  • Pension
  • Savings with projected interest
  • Stocks and bonds
  • Stock dividends
  • IRA or 401(k) distributions
  • Other assets, such as a home or boat  

Something else to keep in mind: Seventy percent of people over 65 need some type of long-term care services in their lifetime. Planning for care costs is a declaration of independence, since waiting until you need services before you plan will limit your care options. Note also that long-term care is a range of services that supports one’s personal and health needs over a long period of time. Most long-term care isn’t medical but rather simply assistance with everyday living.

The Bottom Line

Getting good answers begins with asking good questions. When you’re ready to look at long-term care options and costs, here are some things to remember:

  • No two options are exactly alike in cost, even if they’re the same type of facility. Ask each facility for documented prices.
  • Ask what levels of care are available for each option, since they’ll vary widely. If care needs increase, it’s important to know whether escalating needs can be met or if a move would be necessary.
  • Ask whether each option accepts Medicare or long-term care insurance and understand what those payment options will and will not cover for each facility.

As costs of care rise and people are living longer, looking at long-term care insurance to supplement your savings is a wise choice that can help protect families from having to drain their savings in the event of burdensome care and support costs that continue on for years. There are a wide range of policies offering different degrees of security. Only you can choose what’s right for you.

Questions to ask when you’re comparing long-term care insurance policies:

  • Does it cover in-home care? If so, what types of caregivers ( nonmedical, certified nursing assistants, licensed nurses?)
  • Does it cover an assisted living or nursing facility?
  • Does it cover Care Management Services?
  • What are the limits of coverage? Is there a lifetime maximum?
  • Is there a waiting period for preexisting conditions?
  • Is there coverage for mental conditions, Alzheimer’s, or other dementias?
  • What are the premiums?
  • Is there an automatic adjustment in benefits to keep pace with inflation?
  • Are you allowed to decrease or increase coverage after purchasing the policy?

The U.S Department of Health and Human Services developed www.longtermcare.gov to provide information and resources to help you and your family plan for future long-term care needs. The site can help you understand what long-term care is, how and where to get information and services you need, and how to pay for them. In addition, the Administration on Aging (www.aoa.gov), part of the Department of Health and Human Services, publishes resources, news, and other materials for older adults. 

Published on September 26, 2013.