The cost of long-term care is on the rise, showing no signs of slowing in the future. Thanks to an aging baby boomer generation, older adults are quickly becoming of senior citizen age. To illustrate the crushing cost of healthcare, the Harvard University Study Compensation and Benefits Review decided to take a hard look at the money spent on nursing home care in the United States. The research team found that an appalling 72 percent of Americans actually become “impoverished after just one year of nursing home care” is billed.
Long-term care is not usually covered by private medical insurance or most major medical insurance plans. On top of that, Medicare only pays for skilled and rehab care after a three-day hospital stay for illness. Medicaid, on the other hand, only pays nursing home bills after a loved one has been drained of all other assets. Pretty frightening, isn’t it?
What is Long-Term Care Insurance?
Long-Term Care Insurance, or LTCI, is a type of insurance plan that aims to lessen the financial burden of a nursing home stay. The LTCI policies available today can help to:
- Preserve family assets
- Maintain finances or eliminate the need to borrow money for healthcare needs
- Pay for professional care and relieve family members of caregiving duties
- Allow policyholders to choose where he or she receives care. For example, Medicaid only allows you to choose a nursing home if they pay for care. With an LTCI, you can design your own policy, including whether you want to receive care in a nursing home, in the community, within your own home or in an assisted living facility.
Things to Consider Before Buying LTCI Coverage
Naturally, the benefits your loved one receives will depend on the type of plan purchased. The more benefits the policy offers, the more expensive the LTCI plan will ultimately be. It’s important that your loved one educates his or herself about the types of LTCI policies and what they can offer.
It’s important to remember that LTCI is not right for everyone. No one should alter his or her lifestyle, financially or health-wise, in order to pay for a policy. In fact, most financial experts agree that an LTCI policy should never cost more than 7 percent of a person’s annual income.
Your health will also affect your qualification. Most LTCI companies will not insure someone with severe preexisting conditions. Some companies also require applicants to pass a physical before he or she is ever offered LTCI coverage