One of the most popular topics in health care today, especially with Baby Boomers, is long-term care (LTC). I speak with many people who are interested in LTC insurance, but have a number of misconceptions about this type of insurance and LTC in general.
Before we discuss some of what these are, let’s define what long-term care insurance is. LTCI covers a wide range of services for people who need help with the “activities of daily living” (ADLs) such as eating, dressing, bathing, toileting and transferring (getting in and out of bed for example). It may also be due to a cognitive impairment resulting from a stroke, Alzheimer’s disease, or a similar condition. Levels of care can range from simply custodial help up to some skilled care.
Let’s look at some of the myths of this subject and see how they compare to the realities:
1) Myth: I’m healthy; I’ll never need long-term care. Reality: Hopefully you are right, but the truth is that there is more of a chance you will. It is estimated that 70% of people who live to age 65 will require some form of LTC in their life.
2) Myth: Long Term Care is for older people. I have plenty of time before needing to think about it. Reality: While it’s true the older you get the greater the possibility of needing LTC, it is also true that you may require care at any time in your life due to an accident or an illness, like a stroke.
3) Myth: My Medicare coverage will take care of any LTC which I may require. Reality: Medicare is a major-medical-style health plan, and is aimed at “skilled care,” which means they are trying to make you well or restore you in some way; it does not address long-term care needs, which are “custodial care,” that care delivered when you are not getting better, and they are mostly making you comfortable. The most Medicare will cover is up to 100 days in a skilled care facility, and again, that is with an aim to rehabilitate you. After that you are on your own.
4) Myth: Medicaid will take care of me should I need help with LTC. Reality: If you meet the financial requirement, which means you are at the poverty level recognized by the state, you might qualify. If you have assets, then you will have to spend them down before Medicaid will help. If you are thinking of transferring those assets to your children to protect them, you should be aware there is a five-year look back period (up from three years not long ago) that Medicaid will review. Should you want LTC assistance from Medicaid within that look back period, it is for certain that Medicaid will go after what was transferred and due them. My own thoughts on this are that as New York (and many other states) is dealing with an enormous budget deficit, I would be less likely to count on them in the future for any help addressing our long-term care needs.
5) Myth: I can pay for the cost of LTC out of my own funds. Reality: Perhaps some people can afford to pay for the costs of care, but is spending your assets on this the smartest use of your funds? Are you, your CPA, or your attorney underestimating what care could really cost? Do you have family members, friends, or charities that you would prefer to leave your assets to?
6) Myth: Should I need help, my children or some other family members will take care of me. Reality: Of course your children want to help you and do anything they can for you. Unfortunately, circumstances may not allow them to. They may have their own family, and they may not even be living anywhere near you when care becomes necessary. You must also consider the physical and emotional strain this type of daily care would put on family members. Furthermore, there is the question of dignity; do you want your son or daughter bathing and dressing you?
7) Myth: Long-term care insurance is expensive. Reality: The cost of LTC insurance really depends on many variables: the dollar benefit amount, how long the benefit period will be, if there is an elimination period and how long that is until the policy kicks in, inflation protection or any other riders that you build into the policy, your age and health when taking out the policy and several other factors.
The bottom line is that you have a fair amount of control in determining what a policy will cost you, and it is important to not let the “perfect become the enemy of the good.” In the end, it makes sense to have a discussion with family members regarding this important topic. While this may not be a pleasant subject to have to deal with, it is one that should not be put off. For unbiased help in learning more, please visit www.longtermcare.gov.
Dan Calabrese is an independent life and health insurance agent who lives in LaGrangeville with his wife and two daughters. He specializes in Medicare and long term care as well as life insurance and represents most of the major as well as smaller insurance carriers in the area. You may contact him at 845-223-7924.