Our last post addressed how Medicare covers long-term care—which is to say, it generally doesn’t. Medicare only covers medically necessary services for limited amounts of time.
Long-term care generally refers to personal and medical services for people with chronic illnesses, disabilities, or limitations in their ability to function independently. Medicare will cover a short stay in a skilled nursing facility, but only when medically necessary. Custodial care (non-medical care, such as help with bathing, dressing, toileting, housekeeping, etc.) is not covered by Medicare, yet this is often the kind of care people need the most as they age.
Long-Term Care Insurance
This is where long-term care insurance may help, but it’s important to note that long-term care policies can vary dramatically in the coverage they provide, and they can be expensive. Policies may cover some/all of the following services:
- Nursing home care: A facility that provides skilled health care, personal care, and daily activities in a 24/7 setting. If the policy you are considering covers nursing home care, make sure it covers more than room-and-board alone.
- Assisted living: Apartment-style living where residents receive personal care and services (such as meal delivery), as needed.
- Home modifications: Some policies cover modifications to make it easier to “age in place,” such as installing ramps, and grab bars around toilets and in the shower stall for improved safety.
- Home care: Some policies may cover a personal assistant to help with bathing, dressing, grooming, chores, etc.
- Adult day care: Some policies may cover care outside the home that may include health, social, and other services in a supervised setting, for those who need help during the day.
These are just some of the services a long-term care insurance policy may cover. Review your options with an expert for specific details.
Here are things to consider when looking into long-term care coverage:
- Premium: It’s important to consider whether you’ll be able to pay the premiums on a long-term policy, both now and in the future, especially since premiums can increase over time. If at some point you become unable to pay the premium, you’ll lose the money you’ve invested in the policy. Be aware that, depending on the specific plan and coverage, premiums can be several hundred dollars a month. If the premium amount exceeds 5% of your monthly income, it’s generally not considered a good investment.
- Your Age and Health: Policies are less expensive when you’re young and in good health. You may not be able to purchase a policy when you’re older or if you have a serious health condition.
- Your Income: Spending thousands of dollars on a long-term care policy may not make sense if you currently have difficulty paying your bills and suspect that you will have even fewer assets in the future. If you need care in the future you may qualify for Medicaid, which covers nursing home care, and in most states also covers a limited amount of home care. To qualify for Medicaid, however, you must have exhausted almost all of your resources.
- Your Savings and Investments: Consult with your financial advisor or attorney who specializes in estate planning to learn more about the advantages and disadvantages of long-term care insurance. Also, consult with a tax accountant, since benefits paid out through long-term care are generally not taxed as income. This means that you may be able to deduct the value of your premiums from your federal income tax returns if you have medical costs in excess of a certain amount.
There are several ways to obtain a long-term care policy, including through an individual plan, an employer-sponsored plan, through a state partnership program (which will allow you to have a certain amount of assets and still qualify for Medicaid), or through a professional or service organization.
If you are currently eligible for Medicare, or will soon be eligible, the experts at CA Medicare can help you understand which services (such as skilled nursing care) are covered. Contact us today for more information and for help with Medicare enrollment.