Long Term Care is a wide range of services and supports to provide health or personal care needs over a period of time. In other words, Long Term Care is not necessarily a medical care where it may involve providing individual assitance or supervision with daily activities such as:
Using the toilet,
Eating,
Bathing,
Transfering (from one bed to another),
Dressing,
Caring for incontinence.
These are called Activities of Daily Living (ADL).
Depending on the individual or underlying reasons, the need for Long Term Care maybe for a few weeks (recovery from a surgery, illness, injury) or for many years (permanent disability, dementia, chronic severe pain, ongoing need for two of the six ADLs mentioned above)
The goal of Long Term Care is to provide you assistance with Activities of Daily Living (ADL) as well as to give you independence. Yet one of the main purposes of Long Term Care is mostly overlooked where it provides protection of assets and should be used to in Estate Planning.
In summary, there are five main reasons why there is a need for Long Term Care:
Having enough money for everyday expenses.
Not outliving assets and income (protecting retirement funds and assets)
Remaining independent.
Maintaining good health.
Adequate health care.
Thanks to medical science and modern medicine, people in America started living longer. As a result of this, elderly population is growing faster than before where 80-plus represents the fastest growing segment in our country. Unfortunately, living-longer has consequences of bringing chronic illnesses (such as strokes or Alzheimer's) along with aging.
Further more, due to economic changes in America, children and relatives have moved away and it became harder for families to live close by or under the same roof as it was years ago (economic conditions even hardly allow children to take off from work to care for their parents). Consequences of living longer combined with the impact of recent economic conditions on the families resulted in an environment where families are unable to meet the needs of their aging parents. Thus elderly must rely on professional help, which comes at a cost.
In order to have a better understanding of this subject, we need to understand how "insurance" works in real life: Insurance is not an investment - it is purchased (with rare exceptions) to share the risk with a pool of people rather than assuming the entire risk upon ourselves.
We need to consider three main subjects to make a decision whether to get a Long Term Care Insurance:
Cost of Long Term Care
Statistics in America
Why is there need for Long Term Care?
So the subject is not whether the Long Term Care is a good investment or not, in reality Long Term Care insurance has almost become a need for protection similar to our car insurance, home insurance and most importantly similar to our health insurance.
Medicare is mainly designed to cover medically necessary care and focuses only on medically acute care (doctor visits and hospital stays) or short term services when the condition is expected to improve. Generally it doesn't pay for most Long Term Care and/or custodial care for assistance with ADLs.
Medicare will help pay limited skilled nursing care facility, hospice or home health care if you meet certain conditions described below:
You have to have stayed in a hospital for at least three days,
You have to have admitted to a Medicare-certified nursing facility within 30 days prior to your hospital stay,
You need skilled care and/or physical or other types of therapy.
If these conditions are met, Medicare will pay:
Portion of your cost for up to 100 days,
For the first 20 days, Medicare will pay 100 percent of your skilled nursing facility cost.
For days 21 - 100, you have to pay for your own expenses up to $128.00 per a day and Medicare will pay for the balance.
For days over 100, you pay 100 percent for as long as you stay in a skilled nursing facility.
Medicaid is designed to help people if they meet certain criteria where - most of the time - benefits will begin after the personal assets are depleted. It is often referred to as welfare of elderly.
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Over the next 50 years, elderly population will grow from about 12% to over 20%, which will put a burden on the tax base and availability of money for government programs and the availability of younger caregivers.. Statistical abstract of the United States, 2005 |
Most healthy people in their 50s and early 60s prefer to ignore this future problem and their lack of planning will further burden public programs in the future. Statistical abstract of the United States, 2005 |
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