What is long term care?
Long term care encompasses a wide range of services for people with chronic physical illnesses, disabilities and cognitive disorders. Typical long term care services include assisted living residences, respite care, home health care, adult day care, and care in a nursing home. A national study has shown that 43% of people over age 65 will require nursinghome care at some time during their life.* And this does not include the need for home health care.
*1999 National Association of Insurance Commissioners Shoppers’ Guide to Long Term Care Insurance

Who pays for long term care?
According to the Health Care Financing Administration (1997), nursing home costs are financed by out-of-pocket (private pay) 28%, Medicaid 40%, Medicare 22%.

Will Medicare or Medicaid cover my long term care?
Currently, Medicare will cover 100% of nursing home costs for 20 days, provided you have entered the nursing home after a hospital stay of at least three days. For the next 80 days, Medicare will pay everything but $99 per day (in 2001) toward the cost of nursing home care. (In Massachusetts the average number of days Medicare pays for skilled nursing facility care is 38.) At that point Medicare coverage ends. In addition, you must be expected to recover from your illness and return home. Medicare will not pay for "custodial" care. Custodial care is what most people in nursing homes require.
Medicaid eligibility rules have been tightened significantly. The Revenue Reconciliation Act of 1993 included a provision that narrowed Medicaid eligibility for long term care. In effect, the rules stipulate that any savings, income or assets that you possess must go toward paying your long term care costs — thus pushing your personal net worth below the required line — before Medicaid coverage begins. (There are spousal protection laws in effect that allow a husband or wife who is not in a long term care situation to retain minimal income and assets.) Spending down to qualify for Medicaid is a last, desperate step for most people.

What about trusts?
Even money in trusts may no longer be safe. In order to recover some of their costs, almost every state now places a lien on the estate of individuals who have received Medicaid benefits for long term care. Money held in trust can be included in these liens. Liens can also be placed on real estate that has been placed in a "life estate" to shelter it from long term care eligibility rules.

What does a long term care policy cover?
Since nobody can really predict what kind of long term care services you may need, it may be best to purchase policies that cover care in nursing homes, assisted living facilities, and home health care. These polices offer a pool of dollars that is available for whatever type of long term care services you may need. You pick the daily benefit you want, the total benefits to be paid, and when you want the benefits to begin (elimination period). The policies we offer also cover registered nurses, physical therapists, speech therapists, home health aides, homemakers, companion care, adult day care and respite care.

Can I be turned down for coverage?
There are some medical conditions that will disqualify persons from obtaining coverage. However, you might be surprised to know that people who have had heart attacks, cancer, high blood pressure, arthritis, diabetes or hip fractures may still qualify to purchase long term care insurance.

How much coverage will I have?
How long do you want the insurance company to pay the daily benefit you have chosen? For example, do you want benefits paid for a period of four years? Some insurance companies express the benefit period in terms of total dollars available to pay for long term care services.
Some long term care policies offered build their benefit period by using a pool of dollars rather than a time limit. For insurance, most policies offer benefits periods in terms of years (i.e. 2 years, 3 years etc.). Some policies let you choose your benefit period in terms of a pool of dollars: $100,000; $150,000; $200,000; $250,000; $375,000; or unlimited. Your pool is based on the amount of benefits you use, giving you more flexibility to meet your long term care needs.

When do benefits start?
The method for determining when benefits are payable is based upon your ability to perform activities of daily livingsuch as bathing, continence, dressing, eating, toileting and transferring. Typically, benefits begin to be paid when a person is unable to perform two of the five or six activities of daily living listed in the policy.
Your benefits may begin a specified number of days after you enter a nursing home, depending on the elimination period you select when you buy your policy. Some policies allow you to waive the elimination period. Elimination periods can sometimes be shorter for home care services.

What if long term care costs go up?
Protection against inflation is one of the most important options to consider when buying Long term care insurance. If you select a benefit increase option, your daily benefit will increase over time to keep pace with the increasing costs of long term care. The younger you are when you purchase a policy, the more important it is for you to consider choosing a benefit increase option.

Can I renew my coverage?
All long term care policies are guaranteed renewable. That means the insurance company guarantees that it will allow you the opportunity to renew your policy in order to maintain coverage. It does not mean that your premium will remain the same. Premiums may be increased on a class basis, although your premiums won’t go up just because you get older.

When should I purchase a long term care policy?
By buying insurance at an earlier age, you can reduce premium costs. If you buy a policy at age 75, the premium will generally be two and a half times greater than if you had bought the policy at age 65. It will be six time higher than if you bought at age 55. Also, waiting until you are older and physically infirm may make you ineligible for coverage.

Long Term Care Facts