LONG TERM CARE
How much coverage and for how long?
The amount of long term care insurance coverage you need will depend upon the cost of nursing home care in your area along with your ability to pay for your care from savings, investments and other resources. Generally, long term care policies pay benefits ranging from $30-$200 a day for nursing home care.
Funding a potential long-term illness or disability without depleting your savings and invested assets can be done in many ways. Some are more viable than others depending on your situation.
If your plan is not meeting your objectives, make changes to keep it on track. You may want to contact a qualified financial planner to help you determine if products offered through Lincoln Financial Group companies are a good match for your financial needs.
Long term care insurance— benefits are paid when the insured has a long term care need. Long term care insurance is designed for flexibility to keep those insured in control of the services they receive. Most important, some of the financial risk can be transferred from the individual to an insurance company for a fixed cost.
Family and friends— you may have a support structure in place to allow for no-cost care by others. There's a chance, though, this option may not be available when it's needed or the help may not be skilled enough to handle your impairment.
Pay expenses out of assets/cash flow — you may have enough accumulated assets or ongoing income to pay for the cost of long term care for an extended time. You'll want to consider, however, whether this is the best use of your assets.
Medicare —can supplement your needs, but benefits are limited and you must spend at least three days in a hospital and enter a skilled nursing facility within 30 days after leaving the hospital.
Medicaid — pays for some long term care services for older people with low incomes and limited assets.
Options that do not cover long-term costs:
Medicare supplements —do not cover long term care costs.
Health insurance — is not designed to cover long term care costs. It's a common misconception that group or individually owned health insurance policies will cover long term care.
What do you look for in policies and providers?
Long term care insurance policies are relatively new; therefore, policy language is not yet as standardized as it is for many other types of insurance policies. Every policy pays a specified dollar amount as a daily benefit, but that's only one important feature you should look for when you consider buying long term care insurance.
Guaranteed renewable—ensures that you can continue your coverage without additional medical exams.
Benefit triggers — start the payment of benefits. Federal law mandates that benefit triggers must be included in a long term care policy if premiums are to be deducted from income taxes. Basically, federally mandated triggers include:
- Assistance with at least two daily living activities —bathing, dressing, eating, toileting, continence, and moving from a bed to a chair.
- Cognitive impairment —mentally impaired (i.e., Alzheimer's disease) even if physically able to take care of yourself.
Home health care coverage —ensures your policy pays benefits for care at home as well as in an institution. Policies that only pay for institutional care may force you to be institutionalized even when you could be cared for at home.
Definition of nursing home care — ensures that coverage is provided whether the nursing home you use is classified as skilled, intermediate care, respite or as a custodial care home.
Inflation riders — increase the benefit amount by either a simple or compound inflation rate each year the policy is in effect. They're costly features, but they protect against the rising cost of long-term care.
Linked benefits—combine universal life insurance and long-term care benefits into one policy.
High financial ratings.
Experience in the long term care market.
Daily policy benefits that meet the cost of care in your area.
Flexible waiting and benefit periods to meet your needs.
Discounts for good health.
Discounts for spouses who purchase policies together.
What does a long-term care policy cost?
Long term care insurance premiums vary according to a variety of considerations:
Your age —the younger you are, the less it will cost.
Benefit period —policies that pay benefits for life are more expensive than those that provide benefits for a limited time.
Amount of benefit—the greater the daily benefit, the more your premium will be.
Inflation —because the benefit period is at some future time, a presumed rate of inflation is included in the calculation for the cost of long term care coverage.
Waiting period—if you can wait longer to begin receiving benefits, your cost will be lower. Waiting periods are usually 20-100 days.
Policy features—more options and features generally mean more cost.
All or part of the premiums you pay for long term care insurance may be tax deductible.
The Health Insurance Portability and Accountability Act of 1996 (HIPPA) addressed the tax treatment of "qualified" policies that meet certain federal standards. For policies that meet those standards, premiums are deductible in whole or in part, and the benefit payments are not included in personal income. Any unreimbursed costs are deductible as a medical expense.