vineri, 22 octombrie 2010

Understanding the Value of Long-Term Care Insurance

By Jason Cunningham
May 6, 2009 - 8:40:06 PM


In American, some people do not understand the importance of long-term care insurance. Yet, long-term care is among the highest health care cost in our country. As the human life expectancy continues to rise, we can expect more individuals to require long-term care.

The Need for Long-Term Care Insurance

Long-term care insurance is no different than other insurances. Individuals buy long-term care insurance because they might need long-term care in the future. As we grow older, our chances of needing long-term care insurance increases. The cost of long-term care can be expensive. In some areas, home health care may cost more than $100 per day, on average, for 7 hours of care. An extended stay in an intermediate or skilled nursing facility bed may cost more than $170 per day, depending on the area and on the facility. How many people can afford this cost for a few years?

Before going any further, I must define long-term care. Quite simply, long-term care is the need for constant supervision due to cognitive impairment, the need for standby or hands-on assistance with activities of daily living (i.e., bathing, dressing, toileting, ambulation (walking), eating, and transferring) due to functional decline, or the need for care due to chronic illness. You can feel confident that the above mentioned definition of long-term care is a good one. However, a long-term care insurance policy may have a looser or stricter definition of long-term care.

What Does a Long-Term Care Insurance Cover?

There are differences among long-term care insurance policies, even if the policies are issued by the same insurance company. Some long-term care insurance policies only pay benefits if the insured is in a qualified nursing home. Other long-term care insurance policies pay home health care, assisted living, respite care, and other benefits approved by the insurance company. Also, all of the above mentioned long-term insurance benefits may be combined into one policy. Therefore, an insurance agent can help you to design an individual long-term care insurance policy to meet your needs.

The Value of Long-Term Care Insurance

Long-term care insurance gives people choices. When receiving long-term care, most people want to stay in their homes, if possible. This is why home health care is so popular. Besides, if an individual goes to a nursing home, the nursing home facility will force an individual to spend down his or her assets until that person is “living in poverty,” which may qualify the person for Medicaid benefits. There are certain rules that govern the amount of assets that may be kept in the other spouse’s name, but you will need to consult a tax accountant because this amount has changed over time. In some cases, spouses are forced to live in separate nursing facilities because the facility has no more Medicaid beds or does not accept Medicaid patients. But remember, long-term care insurance is designed to help you to pay for some or for all of your long-term care expenses. Furthermore, you help your state and Medicaid save money if you purchase an adequate long-term care insurance policy, which has two or three years of benefits! Some states give individuals' tax credits for purchasing certain long-term insurance policy; your tax accountant can tell you which long-term care insurance policies qualify.

Analysis

Long-term care insurance must not be overlooked. Many individuals can avoid staying in a nursing home if they have home health care benefits under a long-term care insurance policy. Furthermore, many individuals cannot afford to spend $40,000 to $70,000 per year on long-term care. As this population ages, more people will require long term care. To keep Medicaid expenses down, some states allow individuals to claim a tax credit if they purchase a specific type of long-term care insurance policy.

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