LONG TERM CARE

What is Long Term Care (LTC)?

Long Term Care is a general term that refers to the need of an individual that requires some sort of help with the rigors of daily living. It can refer to those with Cognitive Impairment (you've lost your mind) all the way to those needing assistance with activities such as eating or bathing.

There are many types of facilities that provide LTC. They range from Family Care (your family takes care of you) all the way to Nursing Home Care (24 hour medical and professional monitoring in a nursing home). Other forms of care include Assisted Living Facilities (retirement homes that provide some level of care, but some independence is maintained), Home Care (people come to your home to care for you), Adult Day Care (keeps you busy during the day), Respite Care (short term care in a facility or your home), and Hospice Care (for the terminally ill).

A majority of us will require Long Term Care in our lifetimes. The cost of long term care is fairly expensive (nursing homes can cost $40,000 to $90,000 a year). Also, we are living longer today, so the cost of extended long term care can be a serious burden. To counteract the cost of long term care, you need either a large amount of assets or some sort of Long Term Care Insurance.

Doesn't the Government pay for LTC?

Kind of yes and kind of no. The government's two health insurance programs, Medicare (for the nations sick) and Medicaid (for the nations poor) are already stretched to the max and the government has made it clear that the systems will not be able to handle the looming crisis of long term care demand.

Medicare is designed to cover doctor visits, emergencies, and short-term illnesses, but not long-term care. There is a small long-term care benefit, but it only applies to those that have had at least a three-day stay in a hospital. In this case, Medicare will pay for the first 20 days in a skilled nursing home. Days 21 to 100 must be cost shared (you pay $90 per day) and after day 100 you are on your own, or must turn to Medicaid.

Medicaid has become the default caretaker of our nation's elderly. However, to become eligible you must prove you are poor. If you are paying for long-term care yourself, becoming poor (spending down all of your assets) happens on average in one year. Fifty percent of couples with at least one spouse in a long-term care facility are bankrupt due to their reliance on Medicaid .

With the demand for long term care on the rise, our government has taken a keen interest in the problem. Their solution has been to support the market for private long-term care insurance. Special tax breaks and other incentives have been put in place to encourage the purchase of private long-term care insurance. After all, long-term care insurance maintains your independence, maintains your asset base, and gives you choice of quality care.

The Looming Crisis

As the baby boomer generations marches towards retirement, the demand for long term care is going to grow exponentially. Medicare and Medicaid are already stretched too thinly. As of 2008 the nation's 17,000 nursing homes are almost full to capacity.

The solution, with the government's support, is to do some planning on your own. Remember, you may not live long enough to even need long term care, then again you could need long term care for a long time. This risk must be borne by you or your family members. You can self-insure (pay for long term care on your own), rely on the government (if you have no assets), or carry long-term care insurance.

What is LTC Insurance?

Long term care insurance is an insurance contract between you and the insurance company. It is designed to pay you a certain amount of money per day, like say $150 per day (for a certain number of years). You then have a choice in your form of long-term care. Long-term care insurance provides you with:

1. Cash to pay for expenses
2. The choice of form of care
3. Independence and freedom