What is Long Term Care Insurance?
Long-term care insurance (LTC or LTCI), an insurance product that helps provide for the cost of long term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.
Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.
How Much Long Term Care Insurance Is Enough?
Not only are you dealing with the question of do you need long-term insurance (LTC), but how much coverage is right for you. Here are some guidelines to help you determine your needs.
Determining the right amount of LTC for you
Assume you have $60,000 coming in from Social Security and investment income. That's about $164 a day.
Estimate hourly LTC costs in your area. For example, in Phoenix, in-home care runs about $22 an hour. If all of your income was available for care, that would provide about 7.5 hours a day of care – enough for someone to come in and help with major tasks each day.
However, not all your income is available because you still need money for living expenses in addition to your LTC costs. Plus, if you are married, your spouse may need a significant portion of that income to continue their own lifestyle.
You may decide that of the $164 you have available as income per day, only $40 of it would be available for LTC costs. That would cover less than two hours a day. For the sake of our example, assume that costs in your area run about $220 a day (about average); leaving you with a gap of $180 a day. If you decide to protect against an average stay of about 2 ½ years, then you would want to buy a policy that had a $180 per day benefit that would provide coverage for 2-4 years. You would also want an inflation rider, so if and when you needed care (likely 10-20 years after purchase of the policy) that $180 per day would have increased.
In considering LTC insurance you will have the necessary resources to afford quality care, and you will have the ability to choose how and where you receive this care. It’s important to determine what financial resources will be available to you and role LTC can play in providing you with quality care.
The Benefits of Long Term Care Insurance
Long-term care insurance generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer's facilities. If home care coverage is purchased, long-term care insurance can pay for home care, often from the first day it is needed. It will pay for a visiting or live-in caregiver, companion, housekeeper, therapist or private duty nurse up to seven days a week, 24 hours a day (up to the policy benefit maximum).
Other benefits of long-term care insurance:
Contact us to learn more about the right long term care insurance for you.
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