Insurance for Long Term Care – Do I Need it?
You’re hearing a lot about it these days – Long Term Care Insurance (LTC). Some of your friends have probably signed up already. You may be puzzled about how it differs from Medicare or what your private medical insurance carrier will cover. Chances are your medical insurance will only cover treatment for an illness or injury while it is in the acute stages, not the long-term follow-up care that may be necessary for you to fully recover. It’s important to understand that LTC is not a replacement for medical insurance, or vice versa. They cover very different and discrete areas.
Who Needs Long-term Care?
Long Term Care refers to the services you need when you are not able to care for yourself and need nursing assistance or help with the tasks of everyday living. This need may result from an illness, an injury, or a gradual loss of functionality – either physical or cognitive. Long term care may be necessary for a period of time at any age, but the chances of needing it increase with the passing decades.
About 70% of people over age 65 will require at least some type of long-term care services during their lifetime. Over 40 percent will need care in a nursing home for some period of time. This kind of long term care may take place in your own home or in a nursing facility. You may only require services a few hours a day or they may be necessary round the clock.
Factors that increase your risk of needing long-term care are:
- Age - The risk generally increases as you get older.
- Marital Status - Single people are more likely to need care from a paid provider.
- Gender - Women are at a higher risk than men, primarily because they tend to live longer.
- Lifestyle - Poor diet and exercise habits can increase your risk.
- Health and Family History - also impact your risk.
What does it cost?
LTC is expensive. Your out-of-pocket expenses can quickly climb into the tens and even hundreds of thousands of dollars. Costs for long-term care services vary greatly depending on the type and amount of care you need, the provider you use, and where you live.
Paying for Long-Term Care can be a devastating financial setback for many people. Your area of the country may be higher or lower than average, but the following is a rough guide of what LTC can cost. In 2009, the average costs in the United States were:
- $198/day for a semi-private room in a nursing home
- $219/day for a private room in a nursing home
- $3,131/month for care in an Assisted Living Facility (for a one-bedroom unit)
- $21/hour for a Home Health Aide
- $19/hour for a Homemaker services
- $67/day for care in an Adult Day Health Care Center
The risk of this kind of financial drain is what has made long term care insurance an attractive choice for many people. The two most active carriers in this market have been Genworth Financial (spun off from GE), and MetLife. However, in recent years, State Farm and others have begun to offer their own branded plans. If this sounds like something you want to explore further, the best place to start is The National Clearinghouse for Long Term Care Information: www.longtermcare.gov. Once you are armed with unbiased information, then call your own insurance broker to find out what she or he recommends.