Simplifying Long Term Care Insurance

What is Long-Term Care? When people consider themuch said this to veterans by encouraging them to
subject of long-term care, they often think aboutpurchase long-term care insurance through the new
nursing homes. In fact, long-term care has little to doFederal Long-Term Care Insurance program. The
with nursing homes. Understanding the difference canresult is that consumers are forced to pay privately
help you protect your family and finances.for their care.
The Consequences of Living LongerUnfortunately, the best thought-out retirement plan
Long-term care is a continuum of care services andrarely takes into consideration living a long life. Put
housing that you will need later in life. Think youanother way, those assets and income have been
won't live a long life? Think back 25 years ago. If youallocated to pay for retirement, not for the
had cancer or a stroke, you simply died. Few everconsequences of living a long life. This results in the
heard of Alzheimer's.need to invade principal and divert income. As a
Today, it is the leading cause for long-term careresult, one of a seniors' greatest fear, outliving their
services. The longer you live, the more likely you areassets, literally may come true.
to need care. The question is not who will take careThe Role of Long-Term Care Insurance
of you, because your family will most often, butThe use of long-term care insurance thus becomes
rather what will that care do to your family andan important part of planning for disability caused by
finances.living a long life. The product has two roles: helping
Long-Term Care is Usually Custodial Carekeep families together and allowing your retirement
Long-term care is defined as needing assistance withportfolio to execute for the purpose for which it was
your activities of daily living (toileting, bathing,intended, namely retirement.
dressing, eating, transferring from one point toFrom a family perspective, who will provide your
another, and continence). It also includes cognitivecare? Like it or not, children will play a key role.
impairment so severe that the individual needsLong-term care insurance (LTCI) doesn't replace the
constant supervision.need for family involvement in providing care but
If you need custodial care, chances are it will berather builds on it. It pays professionals to assist the
delivered in the community, not in a nursing home.person with the toughest tasks such as toileting,
Many of you have heard compelling statistics frombathing, feeding and continence. This, in turn, allows
The New England Journal of Medicine stating thatthe family to provide care better and longer at home.
43% of those over age 65 will need nursing homeThat leads to a critical question: have YOU planned
care. What the article actually said is that thatfor the consequences of living a long life? From a
number may spend some time in a facility. The factfinancial point of view, LTCI allows your retirement
is, few end their days in one. Every study conductedplan to stay intact. That is particularly important given
finds that care is overwhelmingly provided at home.the recent steep decline in portfolio value. The
The key question, of course, is who is going to payproduct, in effect, protects the balance of your
for it? Who Covers the Cost?account value.
Medicare & VALTCI also protects income. Although you may qualify
Medicare, the primary health care program forfor Medicaid to pay for nursing home costs by
retirees pays only for skilled or rehabilitative care, nottransferring assets, your income (pension, social
custodial care in any venue. Medicaid, a federal andsecurity, IRA and or 401k payout) cannot be
state program for financially needy individuals will payprotected. When buying this insurance, look for a
for custodial care, but primarily in nursing homes.long-term care specialist. Consider their training,
Funding for home care and assisted living is veryeducational credentials, and commitment to help solve
limited and based on availability of funds. Veteransyour long-term care needs. The key is whether they
believe that the VA will pay for home care, adult daytalk first about a plan or a product. If they are
care, or assisted living. As with Medicaid, funding isinterested in the plan, you are dealing with a
limited and generally based on service-relatedprofessional. If they focus first on product and price,
disability. In fact, the federal government has asconsider getting another opinion.