The Worth of Long Term Care Insurance

We plan for our golden years, but don’t like to think about our twilight ones. As modern medicine and hospice care extends lifespans, more and more seniors find themselves needing assistance that goes above and beyond their financial pans for retirement. While some of these costs can be covered by Medicare and Medicaid, much of it is not, and these costs can quickly eat through retirement. Long-term care insurance is designed cover these extra expenses.

What Long Term Care Insurance Covers

Policies and cover may change from state to state, but generally long-term care insurance covers professional and services that help with ADL, or Activities of Daily Living:

• In-Home Care – Visits by licensed healthcare professionals at home for recovery and/or ADL.
• Assisted Living – Care at facilities for supervision and assistance with ADL for the disabled.
• Adult Daycare – Non-residential facilities to provide ADL and socialization on a daily basis.
• Respite Care – Short-term facilities that allow temporary relief to family providing care.
• Hospice Care – Palliative care facilities for terminally or chronically ill.
• Nursing Home – Long term residential care facilities for socialization and daily ADL care.

What Medicare and Medicaid Do Cover

Medicare provides little coverage in terms of long-term care, instead it covers hospitalization and medication. Medicaid does provide some of the benefits of long-term care insurance. As a welfare program, Medicaid does provide “medically necessary” services. However, these services are limited, and generally doesn’t cover long-term care in-home or assisted living, and instead provides community care services. What is considered medically necessary may change from state to state.

Types of Long Term Care Insurance

Long-term care policies generally fall into two categories based on their tax code. Premiums toward these policies may also be tax-deductible depending on the age of the covered person.

Tax Qualified Policies

The most common modern policy, the “TQ” policy has the advantage that the benefits it provides are non-taxable. Because of this the restrictions are more stringent: the required care must be expected for at least 90 days, and the policies holder must be unable to perform at least two activities of daily living (ADL), or need assistance due to a cognitive impairment.

Non-Tax Qualified Policies

Formerly called “Traditional Long-Term Care Insurance,” these polices balance less restrictions with the possibility of the benefits being taxed. Unlike a TQ policy, these policies can be triggered by the patient’s doctor as a medical necessity, in which case the policy will pay for the care.

Is long term care insurance right for you? Are you uncomfortable relying and placing financial strain on your children or loved ones to support you? Does your current retirement plan have enough money to cover these out-of-pocket expenses? How likely do you think you will need assistance with your activities of daily life? Maybe it’s time answer these question and to know more about the long term care policies available. Contact the H&K Insurance Agency and get a free quote on the types of long term care insurance we provide.