Long Term Care Insurance

What is long term care and who needs it?


Long term care refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves over an extended period. According to the Health Insurance Association of America, 62 is the average age long term care insurance is typically purchased. However, it is important to note that purchasing a policy at a younger age typically means premiums are much more affordable. While you may pay for a longer period, this often evens out the cost of coverage over the life of the policy, as compared to a policy taken out over the age of 65.


What is the cost of long term care?


According to the MetLife Market Survey of Nursing Home and Assisted Living Costs in 2012, the average private-pay cost of care per year in a nursing home was $90,250 for a private room and $81,030 for a shared room. The average private pay cost for a home health aide to provide care at home was $21 per hour, or $84 for a four-hour visit. Assisted living rates also averaged $42,600 per year in 2012. Rates vary depending on region, size of the accommodations, services available, quality of care and amenities.


How does long term care differ from disability insurance?


Although long term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury, and not the care. The policyholder will then have to pay out-of-pocket for any ongoing long term care due to an accident or injury. In addition, Medicare should not be considered a resource for handling any substantial long term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days.


Coverage options


A long term care insurance policy covers any or all of the following types of services: nursing home care, assisted living care, adult day service, home health care and personal care.


Most policies pay a daily maximum benefit and a lifetime maximum benefit. Actual benefits are chosen at the time the policy is purchased. The daily maximum benefit for most long term care insurance policies is usually less than the cost of one average day of long term care service.


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