What is long term care Insurance, and how does it work?

Written by: ihealthcareupdates.com Staff Writter

I was sitting in my car this morning on the way to work listening to a NPR story. The story was on the challenges with long term care insurance, having recently written an article on “Planning to care for your aging parents” for ihealthcareupdates.com, this story  sparked my interest to do some research on what options are available for individuals who want LTCI, whether its to protect their children or immediate family members from the burden of having to take care of them as they get older, or just insuring your future is covered.  When I use the term “Take care of themselves” I am not referring to individuals that are just sick, but individuals who have gotten to the point where they may need daily assistance to bathe, eat, getting in and out of bed, etc.  Here is what I found.


The Basics on LTCI


Long-term care insurance, is like similar product an insurance policy offers, with the goal of helping provide for the cost associated with long-term care beyond a per-determine period.  This is to help support and cover the cost that is normally not covered through federal programs such as Medicare, Medicaid, or a private health insurance policy.


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).



Why would you want it?

Many older individuals may feel uncomfortable relying on their children of family for support.

Without having such a policy, the cost of assisted living often depletes the financial savings of the individual, and provides a burden to family members to maintain the payments for the individuals care, or may have the elder relative or parent move in with them. Consequently Medicaid does not provide assisted living support until you can prove that you have a financial need, and your savings have been depleted.

Most LTCI policies are bought 10 or 20 or even 30 years before a claim is ever made on the policy. Policies offer varying levels of inflation adjustments. In most policies, this protection is built into the initial premium, which is designed not to change during the life of the policy. Some policies offer a flat-rate annual increase in benefits, with three and five percent being the most common choices. Others will offer compounded rates of inflation protection, which is more costly. And some policies will offer lower current premiums and give policyholders the future option to raise their benefit maximums from time to time by paying a higher premium. Consumers most often choose five percent compound inflation protection on individual policies; for group policies, the option to make future changes was the dominant choice. The amount of inflation protection, researchers found, was directly linked to income levels. Only 44 percent of buyers making less than $25,000 elected an inflation-protection feature, while 86 percent of buyers with annual incomes exceeding $75,000 did so.

Read More on LTCI options, and Pitfalls

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