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 Milbet@aol.com
if you have any questions or if I can assist you to think this
through.
