Long-Term Care Insurance – Who Needs It?

Long-term care insurance (LTCI) is an insurance product that helps provide for the cost of long-term care that is generally not covered by health insurance, Medicare, or Medicaid.

Long-term care insurance covers non-medical services to individuals who are unable to perform basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring from one location to another, and walking.

It is wise to purchase LTCI while you are still healthy.

  • About 60% of individuals over age 65 will require at least some type of long-term care services during their lifetime.  Once changes in health occur such as neurological diseases like Dementia, Alzheimer’s or Parkinson’s, etc., long-term care insurance may no longer be available.
  • LTCI generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing home, and Alzheimer’s facilities.
  • Depending upon the terms of the policy purchased, care can be paid for from the first day it is needed, and can cover ADL services for 3-4 hours per day to even 24 hours 7 days a week.

Benefit eligibility and deductibles are VERY IMPORTANT when considering your long-term care insurance options.

As a home health agency providing private duty caregiver services, I have assisted hundreds of individuals with initiating their LTCI claim for ADL needs. Benefits and deductibles of an LTCI policy are critical at this point, as this will determine whether you can afford the at-home care needed.

When you first purchase a policy, individuals usually consider the monthly cost of the premium.  This is short-sighted.  For example, if you are in immediate need of ADL assistance, say after coming home with a fractured hip, you will probably need at minimum of 8-12 hours of care per day and for at least a period of 30 days.

  • If the policy provides payment of $100/day and you have a deductible of 30 days, your LTCI insurance payments will not be effective until the 31st day in this scenario.
  • Average hourly rates in Texas for ADL care at home are $17 to $20/hour; so 8 hours of care would cost as low as $136 or as high as $160 a day.

As you can see, costs for ADL services can quickly deplete the savings of individuals or their families.  First, you have paid for a policy that will likely not benefit you due to the lengthy deductible or elimination period.  Therefore, my recommendation is that you purchase an LTCI policy with the least number of deductible or elimination days.

Next, always consider the amount paid per day — I recommend the highest amount possible with a built-in inflation rider.  So, if you can afford a policy that pays $200/day, purchase it.  As you age and your health, mental, and functional abilities decline, you will be so thankful that you do not have to worry about where the money will come from to pay for your care needs at home or in a retirement community.

Helen Trowsdale, President of AA Care Services, is a nurse administrator with over 30 years of experience as a BSN, psychiatric nurse, and geriatric care manager with adults as well as pediatrics in hospitals, private duty home health care agencies, and residential home health care. Her team of caregivers are dedicated to serving their clients with home care in San Antonio, New Braunfels, Austin, and Dallas; providing clients with consistent, quality care while minimizing the number of caregivers in the home. Learn more about AA Care Services.

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