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Long Term Care  Planning for long term care needs

What is Long Term Care

Long term care is the assistance provided when a person is unable to provide for himself or herself as the result of disability or a prolonged illness.  It ranges from providing personal care at home, such as bathing and dressing, to skilled nursing services in a nursing home.  Long term care is offered through home care agencies, senior centers, adult day care centers, traditional nursing homes, and retirement communities that provide ongoing care.

Who Needs Long Term Care Insurance

A long term care insurance policy is not for everyone , but does make sense as an affordable and worthwhile form of insurance for some.  It depends on your age, health status, overall retirement objectives, income and wealth, and should not cause financial hardship or force you to forego other financial needs.   Whether long-term care insurance is appropriate really requires a full financial analysis.  These policies are for people who want to preserve assets for family members, to assure independence and not burden families members with nursing home bills.  Never buy a policy if:

bulletPaying the premiums will be a burden.
bulletIf the only source of income is a minimum Social Security benefit or Supplemental Security Income (SSI).
bulletIf paying utilities, food or medicine stretches a budget.
bulletIf you have Alzheimer's or Parkinson's disease. No company will want to sell you a policy since they will face losses.

Although the need for long-term care can arise gradually as a person ages and needs more and more assistance with activities of daily living, for most a stroke or a heart attack will be the precipitating need. Those with acute illnesses may need nursing-home care for a matter of months, while others may need care for years.

What Are the Chances That You Will Need Long-Term Care?

Recent studies based on nursing home admissions indicate that 40% of all persons age 65 and over will enter a nursing home in the future.

"If you're 65 or older, you have roughly 10 times the chance of going into a nursing home as you do having your house burn down.  You wouldn't go without homeowners's insurance, so why not insure against the greater risk with long-term care insurance?" 

- Chicago Sun-Times, February 21, 1999 - 

What Portion of These Expenses Will Be Paid by Medicare?

A study conducted in 1987 showed that Medicare paid for less than 2% of the costs and private insurance paid for even less. Medicaid paid for 42% of the expenses, and the patient or his or her family paid over one-half of these costs.

Comment:

The management of risk is a crucial part of financial planning. The potential need for long-term care is a genuine risk. The prudent estate owner will examine long-term care insurance to see if it has a proper place in his or her overall financial plan. Once the disabling condition appears, it is obviously too late to act.

Library of Articles:

bulletComparison of Tax Qualified and Non-Qualified LTC Policies
bulletTax Considerations of Long Term Care Insurance
bulletWhat is Medicaid
bulletCan Medicaid Help Pay for Long Term Care
bulletWhat is Medicare
bulletKnow the Basics About Medicare
bulletCommon Elements in Long Term Care Policies
bulletGuide To Long Term Care Insurance - PDF file
bulletChoosing A Nursing Home

 

 

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Last modified: 01/02/09