November is Long-Term Care Awareness Month
November has been declared Long-Term Care Awareness Month because even the U.S. Congress recognizes the importance of making people aware of the risks and costs associated with long-term care. As a professional committed to helping people protect themselves against the risks of long-term care, I want to share some basic information with you regarding what might be one of the most exposed areas of your financial portfolio.
You may be saying to yourself, I will never need long- term care, and you may be right, but what happens if you guess wrong? If you guess wrong, and need care, you must ask yourselves what would be the emotional, physical and financial impact to the ones that you love and care about the most? That is exactly why this topic must be addressed.
So we must first define what long- term care is. As defined by the US Department of Health and Human Services, long-term care is a range of services and supports you may need to meet your personal care needs. Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (ADLs), such as: Bathing, Dressing, Using the toilet, Transferring (to or from bed or chair), caring for incontinence and Eating.
I hear some very common misconceptions about who actually pays for long- term care. I often hear that “Medicare or Medicaid will cover my long-term care expenses”.
Medicare does not pay the largest part of long-term care services or personal care-such as help with bathing, or for supervision often called custodial care. Medicare will help pay for a short stay in a skilled nursing facility, for hospice care, or for home health care if you meet the following conditions:
- You have had a recent prior hospital stay of at least three days
- You need skilled care, such as skilled nursing services, physical therapy, or other types of therapy
If you meet all these conditions, Medicare will pay for some of your costs for up to 100 days. For the first 20 days, Medicare pays 100 percent of your costs. For days 21 through 100, you pay your own expenses up to $140.00 per day ( Medicare Supplement pays that deductible) and Medicare pays any balance. You pay 100 percent of costs for each day you stay in a skilled nursing facility after day 100.
Medicaid benefits may be available if you need care and you have very limited resources. It is a joint federal and state government program that helps people with low income and assets pay for some or all of their health care bills. To be eligible for Medicaid, you must meet certain requirements, including having income and assets that do not exceed the levels used by your state.
With Medicare and Medicaid being the biggest providers of long -term care, the Government has created a vehicle to encourage consumers to invest in long-term care insurance.
Through the Partnership program, states promote the purchase of private long-term care insurance by offering consumers access to Medicaid under special eligibility rules should additional long-term care coverage (beyond what the policies provide) be needed. Medicaid, in turn, benefits by having individuals take responsibility for the initial phase of their long-term care through the use of private insurance.
In the Philadelphia area, the average cost of a Private Nursing home today is $294.00 a day. If you needed care in a nursing home, with the average stay being 2.5-3.0 years, what would it do to the financial plan you put into place? The cost of that care would be approximately $321,930, but in 20 years that same 3 year stay would cost you approximately $733,020. These figures do not include care that may be needed at home or in an Assisted Living Facility prior. This is exactly why the topic of long-term care insurance needs to be addressed.
I encourage everyone to address their options should they need care, as long term care insurance is not right for everyone. You must be healthy enough to qualify and must be financially capable of paying for your premiums without it changing your lifestyle. The younger you are, the less expensive it generally is, and the healthier you are the more options you will have.
For more information, please visit my website at http://www.aiplanners.com, or please feel free to call me at 800-789-5191.
Matt Sussman, CLTC, President
American Insurance Planners, Inc.
3140-B Tilghman Street, Suite 205
Allentown, PA 18104
Voice: (610) 398-2200 | Fax: (610) 398-2206
e-mail: [email protected]
1. US Department of Health & Human Services (www.longtermcare.gov)
2. John Hancock cost of care study