Senior Citizen's Guide digital books
Senior Citizen's Guide

Long Term Care Insurance in Perspective

Better than three-quarters of Americans think that long term care is a major problem in our country. However, most expect government insurance in the form of Medicare to pay the cost of long term care. In fact, Medicare pays about 2% of the cost of nursing home care and less than 20% of the cost of home health care.

Many folks have the mistaken expectation that Medigap coverage will pick up long term care costs where Medicare leaves off. Medigap essentially pays only where Medicare would have paid but for Medicare deductibles and co-insurance. If Medicare won't pay, Medigap won't pay with very few minor exceptions.

The issue is critical. Over 70% of single individuals, and 50% of couples with one partner, in a nursing facility are impoverished within a year (Business and Health, January 1997). Forty-eight percent of us will need skilled nursing facility care after age 65 (AARP 1996 National Nursing Home Study). And among couples, 70% can expect at least one partner to need skilled nursing facility care after age 65 (Wall Street Journal, 4/23/90, quoting the Agency for Health Care Policy and Research).

Medicare simply does not provide long term care. The care which Medicare does provide is limited both in benefit and for whom it is available. Medicare provides only skilled nursing facility care on an inpatient basis under very specific conditions. Medicare does not provide custodial home care. The home care that Medicare does provide is only for short term recuperative situations. And, according to U.S. News and World Report (8/11/97), 40% of reimbursement requests are ineligible.

Medicaid is not a solution. The overwhelming point is that to qualify for Medicaid in Pennsylvania, you must essentially spend yourself down to nothing ($2400) if you are single or to a relatively modest sum ($80,760) if you are married. Those are assets which might have otherwise been used to enjoy your retirement, protect your spouse, or to pass on to your children or to charities.

Long term care insurance, in very simple terms, is the flu shot you may truly need to protect against terminal financial illness. LTCI does not replace Medicare, Medicare HMO, or Medicare+Choice or Medigap insurance. LTCI may pay for nursing home care or for home health care or for both. Benefits will be free of Federal income tax and premiums can be included in calculating a medical expense deduction if your policy is qualified under the Health Insurance Portability & Accountability Act of 1996 (HIPAA). Most importantly, LTCI policies are not limited, like Medicare, to paying for skilled care only. Intermediate and custodial care are also covered.

It is important to work with a specialist in LTCI who can first help you evaluate your needs, not just sell you a product. Be sure that you are then given quotes from at least three major LTC insurers. Premiums can vary significantly both between companies and depending on how your policy is structured.

LTCI, understood and tailored to your needs, is a powerful resource for assuring your dignity, freedom of choice, and financial stability in an otherwise difficult time. It is, I believe, an essential asset in a living estate, one which could indeed contribute mightily to the preservation of your assets for you, your spouse, and those for whom you care.

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