Sixty percent of adults over the age of 65 will require long-term care at some point in their lives. Having a long-term care insurance policy does not ensure that all costs will be paid. Most insurance policies, including Medicare, cover only a fraction of the cost of skilled nursing homes, and do not cover most assisted living costs. Long-term care insurance does more to help pay for these expenses due to:
- illness
- accident
- frailty
- dementia
There are two types of long-term care insurance, tax-qualified and non-tax-qualified. Benefits received through a tax-qualified plan are not taxable. Benefits received through a non-tax-qualified plan might be taxed as income. With most non-tax-qualified plans, your Senior parent can start receiving benefits when a doctor decides that regular care is required.
Instead of paying for services directly, most long-term care plans allow Senior’s to select a daily or monthly benefit amount, ranging from $50-$500. Benefit payments support home health care services, assisted living, or residential skilled nursing.
Services
Most long-term care plans:
- have a lifetime maximum for benefits
- cover specific situations, such as facility care
- focus exclusively on services associated with chronic illness or disability
To start receiving benefits from a tax-qualified plan, your Senior parent must lose the ability to perform at least two activities of daily living without some form of assistance such as:
- dressing
- bathing
- eating meals
- toileting
Specialization
Long Term Health Insurance is its own specialty in the world of Insurance. Look for a reputable firm. One that has been around for a long time. Check with the Better Business Bureau once you have identified one of interest to make sure their license is up to date and they are highly rated.
Preparation
- Remember, the older and sicker a person becomes, the more expensive it is to obtain long-term care insurance. Buying a long-term care policy early saves money.
- Be ready to discuss your parent’s current health history and/or prognosis.
- Be familiar with the current health care coverage.
- Time frames for projecting the need for long term care coverage is important.
- Know the monthly budget constraints for this type of insurance.
- If Medicare is involved – know where they start and stop in coverage.
- Understand the level of participation/commitment the family will agree to if long term care is required; assuming this is even an option.
Evaluation
- Describe the various plans and what types of care will be covered in those plans.
- What are the monthly fees? Ancillary fees?
- When can the policy holder start to receive benefits?
- Can the doctor recommend long term care at any time, or is there a list of specific criteria to be met in order to receive payment?
- Do you pay for costs directly or make cash payments to policy holders? If you pay cash, what are your payout plans?
- What is the lifetime maximum for each plan you offer?
- Are your plans tax-qualified?
- Does your coverage have any perks we might be interested in?