Individuals are living longer—but we are not necessarily living these years in the best of health. While medical advances have helped increase our life expectancy, we still must face the realities of aging. A less than happy truth is that we often spend several of our last years in need of assistance with day-to-day routines. As healthcare expenses rise, it is important that we think about ways to protect you against the risks long-term care presents.
What Is long-term care?
Long-term care refers to the care and services required when a person is unable to perform activities of daily living and/or when an individual suffers from severe cognitive impairment. This type of care requires custodial care, not skilled care; that is, the person receiving care needs assistance with activities of daily living or supervision, not treatment that can only be administered by a doctor or skilled nursing staff.
Activities of daily living include things like:
- Maintaining continence
Depending on the individual and the extent of the care he or she requires, you can receive long-term care services at home, at a skilled nursing facility, at an adult day care center, or at an assisted living facility.
Funding long-term care
There are several ways to pay for long-term care services. Some of the most popular include Medicare, Medicaid, personal savings, and long-term care insurance. It is important to recognize the limits of each of these options.
- Medicare will only pay for skilled and rehabilitative care. This means that it can pay for short-term care with the expectation that health will improve. It does not cover long-term care or custodial care.
- Medicaid coverage is typically limited to skilled nursing facilities. You also must meet state welfare guidelines to receive benefits. While this care option may seem tempting, it is important to remember that the Medicaid system has become overburdened and may not be a viable option when you need it.
- Personal assets can cover all types of care; however, long-term care can be expensive and may drain your savings leaving little for your family or heirs.
- Long-term care insurance (LTCI) may be an affordable way to fund your care and protect your overall financial plan. It works like every other type of insurance to protect you and your assets. LTCI covers an array of treatment options. It will pay for all levels of care: skilled, intermediate, and custodial. It also covers care in a variety of settings such as home care, assisted living care, adult day care, and nursing home care. Premiums are a fraction of the cost of long-term care, and with proper coverage, you may avoid dipping into savings to fund your treatment.
Obtaining LTCI timeline
- To start the process, the insurance company needs three things:
- A completed application
- A copy of your medical records or your APS (attending physician statement)
- A check
- It takes 6-10 weeks to get an underwriting decision.
- Your application may be approved, or it may be declined, in which case you get your check back.
- If you get approved, you have 30 days to review the policy. We will do this together.
- If you decide not take it, you get your check back.
- If you approve the policy, I will deliver the policy and review all its features with you again.
- If you accept the policy, I will review it as needed to ensure it continues to meet your coverage needs.
Undoubtedly, many individuals will require long-term care at some point in their lives. As your financial advisor, I am committed to protecting you and your assets against this risk. It is important that when thinking about long-term care, you consider what kind of care you will most likely need and where you would prefer to receive this kind of care. Once you have given these issues some thought, we can begin to work on a plan to ensure that you receive the style of treatment you desire.