Long term care insurance (LTC insurance), unlike most health insurance plans, pays for the cost of your care when you need permanent help with activities of daily living (bathing, dressing, eating, etc.). Depending on the LTC policy, covered services may include nursing home care, personal care at home, assisted living facilities and/or adult day care. While some insurance plans, including Medicare and Medigap, may pay for a limited number of days in a nursing home or short term health care services at home, they have no extended benefits.
A good policy can help ensure you get the care you need at a time in your life when your health care costs may be at their greatest. Generally speaking, purchasing long term care insurance is a good idea for individuals who anticipate not being able to privately pay for long term care, which currently averages $118,812 (semi-private) and $137,784 (private) per year in the greater San Jose area. Premiums are based on health, age and type of policy. Most financial planners recommend LTC insurance be purchased in your late 50’s or early 60’s, when your health is still good and the cost still affordable.
LTC insurance plans vary as to when and how much they will pay for long term care expenses.
When do policies begin paying for your long term care?
Typically, policies establish standards that you must meet in order to initiate the policy. Most will begin covering expenses when you are unable to perform a set number of activities of daily living or if you suffer a cognitive impairment which requires substantial supervision. Most policies will also become effective when a doctor certifies specific care is necessary. Whatever standard is used to initiate the benefits of your policy, it is highly likely there will be an “elimination” or “deductible” period which is essentially a period of time during which you are receiving care, but your policy is not paying for benefits (depending on the policy, this period could last anywhere from 0 days to one year).
How much will your policies pay for your long term care?
Each policy is different. Some policies have a daily or monthly benefit limit which provides a predetermined amount that the policy will pay each day or each month. Other policies have a maximum benefit limit that provides a predetermined length of time or a predetermined dollar amount that the policy will pay.
What are the drawbacks of long term care insurance?
Other than the cost of the premiums, the most obvious drawback of LTC insurance is that not everyone can obtain or chose to pay for a policy. If you have a pre-existing condition, for example, you may not find a policy for which you qualify. Or you may decide that relying upon Medi-Cal is a better option.
Is long term care insurance right for you?
The decision to purchase LTC insurance is not one that should be taken lightly. Although LTC insurance is a great way to avoid privately paying for elder care, LTC insurance is not the solution for everyone and not every policy will provide the coverage that best suits you. It is important that you purchase your policy from an honest, knowledgeable professional – someone that not only understands long term care issues, including the Medicare and Medicaid/Medi-Cal systems, but someone who will find a strong policy from a reputable company that takes into account your family’s health history, your current financial situation and any alternative resources you may have for long term care. There are a number of steps a Medi-Cal applicant can take to preserve their assets, ranging from gifting strategies, personal care contracts, private annuities and raising the Community Spouse Resource Allowance. What you need to remember is that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.
ABOUT THE Litherland, Kennedy & Associates, APC, Attorneys at Law
Roy W. Litherland is an attorney whose practice emphasizes elder law and estate planning. Roy has practiced law in the greater Bay Area for over 35 years and is certified as a legal specialist in Estate Planning, Trust and Probate Law by the California State Bar Board of Legal Specialization. In addition to his extensive legal background, Roy was also previously licensed as a Certified Public Accountant. Although Roy has an extensive background in accounting, he retired his license to practice as a CPA to devote his time and energy entirely to the practice of law, specializing in estate planning, trusts, Medi-Cal planning, and probate. Roy is a noted speaker on living trusts, Medi-Cal Planning, and estate planning. He is a member and designated Fellow of the American Academy of Estate Planning Attorneys, an organization that fosters excellence in estate planning.
The Litherland, Kennedy & Associates, APC, Attorneys at Law is a member of the National Academy of Elder Law Attorneys and the California Advocates for Nursing Home Reform.
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