InsuranceThought — Blogs About Insurance

A new survey performed by the nonprofit LIFE Foundation has found that despite the annual cost of home health aides now topping more than $40,000 per year and private nursing homes approaching an annual cost of $75,000, 9 out of 10 Americans do not have a plan that will adequately pay these expenses when the time inevitably comes. Close to one in four claim they will rely on their friends and family, while many others believe – mistakenly – that their health insurance or government programs will help them pay for their long-term healthcare expenses.

When asked how they would pay for assistance with daily living should they need it in the future, this is how Americans responded:

Family and Friends 23%
Health Insurance 20%
Medicare 16%
Savings 13%
Social Security Benefits 11%
Long-Term Care Insurance 10%
Medicaid 7%
“These survey results illustrate that most people are confused about how they will pay for long-term care services, which is a scary thought considering 70 percent of Americans who reach age 65 will need such care at some point in their life,” says Deb Newman, CLU, ChFC, LTCP, president of Newman Long Term Care and a LIFE Foundation Board Member. “Health insurance will not cover long-term care services and government programs like Medicare and Medicaid have many limitations. That is why it is critical for Americans to take steps to protect themselves with long-term care insurance. It is the only way to make sure you will have the financial means to afford the kind of care you’ll need and prefer.”

LIFE has reviewed some misconceptions that most Americans have regarding the funding of the sources available for long-term healthcare. These are the things that must be kept in mind when determining if long-term health insurance is needed:

1. Health Insurance will only typically provide coverage for medical care, not the custodial services necessary to those who can no longer take care of their own basic needs.
2. Medicare is a government-sponsored insurance for older Americans, but will generally only pay for short-term rehabilitation after being hospitalized for a minimum of three days, are homebound, or are eligible for Hospice services. It does not pay for most forms of long-term care.
3. Medicaid will pay for long-term healthcare, but only for individuals who have very limited assets and fall within the state’s pre-determined poverty level.
4. Social Security’s benefit for the average retiree is currently only $1,153 per month, which is only a mere fraction of the cost of most long-term care services and facilities.
5. Savings, though improving, are inadequate for most Americans. Most of us are unlikely to have the savings necessary to cover the high costs associated with long-term care.

LIFE has offered these five questions to help Americans determine where to start with long-term healthcare coverage:

1. How much coverage do you need and for how long? You can begin by assessing the cost for services in your area by using LIFE’s Cost Estimator at www.lifehappens.org/longtermcarecost
2. How long can you wait for coverage to begin? The longer the elimination period – or how long it will be before the coverage will start – the more affordable your premiums will be.
3. What services are important to you? It’s best to find a policy that will be as flexible as possible in order to receive any type of care available when you need it.
4. Will your policy keep up with inflation? Inflation protection is extremely critical when it comes to a long-term healthcare plan; you want your coverage to keep up with the rising costs of care so you won’t fall short when the time comes.
5. Does the policy qualify for a new state-run Long-term Care Partnership Program? These programs, on which government has recently been cooperating, offer asset protection to policyholders. For more information on this program you should get in touch with your local insurance agent.

Long-Term Healthcare is Important to Us All