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Long Term Care Insurance: Is It for You?

by Betty Soldz

Long term care insurance is of special importance to women and many of us are are pondering the question of whether or not to purchase a policy.  A woman's decision on the purchase of this product may be just as important in later years as an understanding of Medicare and Social Security.   One reason is a longer life expectancy for women:  they outlive men by about seven years.  While men tend to have more acute health episodes that lead to earlier and more rapid deaths, women tend to have more chronic diseases that impair their mobility,  leading to the need for long term care.  Because our mates usually die before us and our children, if we have them, may not be available to care for us, we have to plan for our own needs in the future.  One of the ways to do this is to understand what long term care is all about, who pays for it, the risk of needing such care, and then consider whether Long Term Care Insurance is right for you.

Long term care is personal care (also referred to as custodial care) in order to assist with the activities of daily living (ADL's).  These are the daily tasks that people lose the ability to perform themselves when they have disabling chronic conditions.  The ADL's are bathing, dressing, continence, toileting, transferring, eating and ambulating. Other help that  might be needed is assistance with managing medications, shopping, paying bills and keeping medical appointments.  While almost anyone may need assistance, women are more likely to need this type of help. How much personal assistance a woman will need depends on her health, her support system, whether she is single,  married or partnered and whether she can count on her family for help.

Often,  there is a misconception about Medicare and coverage of long term care.  Medicare covers only short-term medically necessary care in a certified skilled nursing facility; one has to have been hospitalized for three full days within 30 days of  admission in order to qualify for payment.  Another requirement is that you must need skilled care on a daily basis.  The longest Medicare will pay completely, even under these conditions, is 20 days.  After that you will have a co-payment of $95.50 per day (the 1999 amount) for the remaining 80 days that Medicare may continue to pay.  Most people never qualify for the full 100 days of Medicare coverage in a skilled nursing facility.  Medicare reimbursement for home care is also very limited. In fact, most such services must be purchased by the recipient and the costs are largely paid out of pocket

You might wonder what your chance is of needing a nursing home and what your expenses might be. Nursing home care costs between $40,000 and $70,000 per year depending on where you live. If one needs round the clock care at home it could be just as costly.   The Brookings Institute estimates that if you are 65 years old you have a 20% chance of never having long term care expenses in a nursing home or at home; 58% have the chance of having expenses between $1 and $50,000;  9% have a chance of having expenses between $50,000 and $100,00 and almost 13 % may have expenses over $100,000.  Now for some good news.  Most nursing home stays are relatively short.  Seventy five percent of those who enter a nursing home stay one year or less and 52% of those stay less than three months.  Unfortunately there is no sure way of knowing where nor whether we will fit into these statistics. Long term care insurance, which can help pay for skilled nursing and custodial care, may be the answer for some women.  While there are some alternative options to long term care insurance, which I will address at another time, this article will try to assist you with the decision on whether or not to purchase such coverage.

How, then, does one decide whether to purchase Long Term Care Insurance? It is not for all women but in order to help you make an informed choice here are some guidelines:

  • First, consider whether  you can afford the premiums now and in the future.  A general guideline says you shouldn't spend more than 7% of your annual income for such insurance.  Premiums can and have been rising.  In addition, many women's income falls when they lose a mate, which could  make it harder or even impossible to continue paying the premium. 
  • If still employed, consider what your income will be after retirement: will you still be able to afford the premium?  For women who have a very limited income and low non-housing assets (less than the cost of a year in a nursing home) such insurance is probably not a good idea since they will probably quickly qualify for Medicaid assistance to help pay for nursing home costs. (Medicaid is a joint federal-state program that pays for health care and nursing home care for those who cannot afford to pay for these services themselves.)  Check with your county welfare or social services office for income and resource guidelines.
  • A woman who has a high income and  large assets can probably pay for her own care. Unless protecting her estate is very important to her she may not need to purchase such coverage.
  •  For a woman who falls somewhere in between, long term care insurance may be worth considering. 

There are important things to know about purchasing such coverage. Your age will affect what you will pay for long term care  insurance.  The younger you are the lower the premium will be.  However, because we don't know how long it will be until we will need long term care, it is best to purchase a policy that includes a 5% compounded inflation protection feature.  This feature automatically increases your benefits by 5% each year. This is important because the cost of nursing homes has been going up much faster than inflation.

If you have a serious health condition you may not be accepted for long term care insurance. It is therefore wise to consider its purchase around the time you are thinking of retirement or even before. A Comprehensive Policy will cover both home care and nursing home care.  There are also Nursing Home Only and Home Care Only polices on the market. Since many women will be without a family caregiver, the home care option should be carefully considered because if one needs a lot of care it may be difficult to stay at home with only the reimbursement from the insurance.  The daily amount paid by most policies does not cover more than four hours of care.  A policy that pays more will be quite expensive.

If you purchase a policy, it is wise to make sure it will pay if you decide on moving into an assisted-living or continuing care facility.  Such facilities provide individualized personal care and health services for those needing help with activities of daily living.  More and more women today prefer this option instead of trying to stay at home or going to a nursing home. (This, and other types of alternative housing, will be addressed in a later article.)

Choosing a long term care policy is very complicated.  There are many different policies and many different options. You can get free unbiased assistance in understanding LTC insurance policies, as well as a list of companies selling such insurance by contacting your State Health Insurance Assistance Program.  You can obtain the phone number by calling your State Department of Insurance or Department of Aging.  The number is also available from the toll free Elder Care Locator # l-800-677-1116. 

As you look ahead to the future, knowledge and preparation for a time when you may need care can help insure that you will be able to stay in control of your life and meet the many challenges ahead. 

Please feel free to contact me at if you have any questions or if I can assist you to think this through.



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