Long Term Care Insurance
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Long-term care insurance
coverage can vary widely. Some policies may cover only nursing home
care. Others may include coverage for a whole range of services like
care in an adult day care center, assisted living, medical equipment,
and formal and informal home care.
Long-term care insurance premiums vary, depending on your age and health
status when you buy the long-term care insurance policy and how much
coverage you want. Additionally, you must be in generally good health to
pass underwriting when purchasing a policy. For this reason, it may be
better to buy long-term care insurance at a younger age when premiums
are lower. If this is done, a periodic review is advised to make sure
your policy covers your current and future long-term care needs. But you
can buy long-term care insurance at any age. Talk about this with a
family member, insurance agent, or financial advisor to learn what is
best for you.
The cost of care, especially in nursing homes and assisted living
facilities, varies from state to state. Make sure that the long-term
care insurance policy you buy will cover the costs of care where you
plan to use it.
Most long-term care insurance policies offer certain tax benefits. These
policies are called Tax-Qualified, or TQ, policies. Depending on your
age, you can include some or all of the premium for a TQ policy as a
medical deduction on your Federal income tax form if you itemize your
deductions. Also, when you receive payments from a Tax-Qualified policy,
you generally don’t have to pay Federal tax on them.
What is Long-Term Care?
Long-term care is a variety
of services that includes medical and non-medical care to people who have
a chronic illness or disability. Long-term care helps meet health or
personal needs. Most long-term care is to assist people with support
services such as activities of daily living like dressing, bathing, and
using the bathroom. Long-term care can be provided at home, in the
community, in assisted living or in nursing homes. It is important to
remember that you may need long-term care at any age.
You may never need long-term care. This year, about seven million men and
women over the age of 65 will need long-term care. By 2005, the number
will increase to nine million. By 2020, 12 million older Americans will
need long-term care. Most will be cared for at home; family and friends
are the sole caregivers for 70 percent of the elderly. A study by the U.S.
Department of Health and Human Services says that people who reach age 65
will likely have a 40 percent chance of entering a nursing home. About 10
percent of the people who enter a nursing home will stay there five years
Medicare and Long-Term Care:
Long-term care services can
be very expensive. It is important to think ahead about how you will pay
for the care you get. Generally, Medicare doesn’t pay for long-term care.
Medicare pays only for medically necessary skilled nursing facility or
home health care. However, the skilled nursing care and home health aide
services are only covered on a part-time or “intermittent” basis. You must
meet certain conditions for Medicare to pay for these types of care when
you get out of the hospital. Most long-term care is to assist people with
support services such as activities of daily living like dressing,
bathing, and using the bathroom. Medicare doesn’t pay for this type of
care called “custodial care.” Custodial care (non-skilled care) is care
that helps you with activities of daily living. It may also include care
that most people do for themselves, for example, diabetes monitoring. Some
Medicare + Choice plans may offer limited skilled nursing facility and
home care (skilled care) coverage if the care is medically necessary. You
may have to pay some of the costs. For more information about Medicare +
Choice plans, look at the Medicare Personal Plan Finder.
Medicaid and Long-Term Care:
Medicaid is a State and
Federal Government program that pays for certain health services and
nursing home care for older people with low incomes and limited assets. In
most states, Medicaid also pays for some long-term care services at home
and in the community. Who is eligible and what services are covered vary
from state to state. Most often, eligibility is based on your income and