As the population continues to age, it has become easier to find high-quality information to help you identify the best insurance policy for your needs. The key to choosing long-term-care insurance is to understand what this type of insurance policy does and does not cover. If you understand your benefits, how premiums work as you age, what limitations or exclusions your policy contains, how renewal works and other basics of using your benefits, you can make a wise decision that could save you money later on.
Understanding the Mechanics of Long-Term-Care Insurance
Long-term-care insurance is the policy you turn to when you have a longer-term illness, limited ability to perform necessary daily tasks yourself, or some impairment physically or cognitively that makes living alone full-time impractical. Not everyone is a good candidate for purchasing long-term-care insurance, as it interacts with Medicare and Medicaid to support individuals who need medical care on a longer basis. In general, individuals with a low average retirement income can use Medicaid to obtain long-term care, and individuals whose combined assets exceed one million dollars may not need to purchase a policy to obtain long term care insurance policy benefits since their independent financial assets are sufficient. It is people with median retirement incomes who are most likely to benefit from purchasing a long-term-care insurance policy. This is because Medicaid does not kick in until an individual has exhausted his or her own personal means for affording care, and Medicare has a limited range of care types it covers. Long-term-care insurance is a smart choice for anyone in the mid-income range who can afford to pay up to five percent of their annual retirement income on a long-term-care policy.
What Long-Term Care Does and Does Not Cover
A long-term-care insurance policy covers long-term-care services such as: a stay in assisted-living facilities, nursing homes, live-in or visiting skilled care, housekeeping and companion services, nursing or therapist visits, and other benefits that are not directly related to diagnosing and treating illness. Many times an individual is relatively healthy but, due to age or limitations, no longer able to fully care for himself or herself. Some policies also include the installation of assistance devices, such as safety rails and lifts, as well as freestanding support aids like walkers and orthopedic shoes. Typically, these aids must be prescribed by your physician to be covered under a policy.
In general, long-term-care insurance does not cover the things that are covered under a standard health care policy or through Medicare or Medicaid. Also, many times long-term-care coverage does not activate immediately. Depending on the policy, you may need to wait as long as one to three months (this is called an “elimination period”) before you can begin using benefits. Understanding how the elimination period works can be important if you anticipate relying on the help of loved ones for your care in later years. Today, an estimated 90 percent of all long-term care is being provided by loved ones who are not compensated. So, it is wise to plan ahead and opt for a policy with a reduced or no elimination period.
As you research options, visiting pertinent websites can help you gather information about how different insurers handle the elimination period, renewals, exclusions, limitations and coverage limits. Because not all policies are created equal, one insurer may include both skilled and unskilled care, while another may only offer nursing home care and yet another may require you to be hospitalized before you are eligible to claim benefits. This is why it is so important to review both the big and fine print before you choose a long-term care policy.
Image provided by PrimusCare from Flickr’s Creative Commons
About the Author: Mark Cardinale does retirement planning in the family insurance business. He was instrumental in ensuring that long-term-care coverage be added to his company’s list of products. Mark recommends using http://www.ltctree.com for your long-term-care insurance needs.