By 2020 one out of six Americans will be over 65, that is 20 million more senior citizens than today. (1)
1 Aging in the United States, published by the Bureau of the Census
2 New England Journal of Medicine
3 Genworth Financial Research survey February 2006
4 Metlife 2005 Survey
5 Gallup Organization Inc. Public Attitudes on Long Term Care: The EBRI Poll. August, 1993; 15.
6 Centers for Medicare & Medicare Services (CMS)
It's a common misconception that either Medicare or major - medical insurance will cover LTC expenses. Medicaid covers LTC only after a person "spends down" his or her assets to qualify for assistance. Families are at risk of forfeiting hard-earned assets to pay for a loved one's long-term care needs.
Long-term care (LTC) is best defined as ongoing nursing, social, and rehabilitative personal care, or services provided in a nursing home, one's own home, or an alternative site, such as an assisted-living facility. Many people underestimate the costs of LTC and don't plan adequately for their future. Planning for LTC is crucial to retirement security plans because without it, individuals may be faced with insurmountable long-term care costs that can quickly deplete their life savings.
As baby boomers get closer to retirement age, there's been a shift in public policy, with more focus on assuring the solvency of such programs as Medicare and Social Security that provide life security to Americans. In so doing, both Democratic and Republican lawmakers have signaled that it's critical for Americans to assume personal responsibility for planning their long-term care and security.
A long-term care insurance policy pays you a daily benefit to cover the cost of long term care. Long term care is ongoing care for people with chronic disabilities. It includes custodial care -- assistance with activities of daily life like eating, bathing and getting dressed -- in a nursing home, an assisted living facility or in the patient's own home.
This type of care isn't covered by regular medical insurance
policies or by Medicare, and it can be enormously expensive.
The average cost of a year in a nursing home today is almost
$71,000 while the average nursing stay is 2.4 years. Government
studies indicate that 60% of Americans who reach 65 will
eventually need some type of long term care. Long-term
care insurance is essential if you are concerned about
protecting your assets and maintaining your financial independence
throughout your life.
It's a common misconception that either Medicare or major
- medical
insurance will cover LTC expenses. Medicaid covers
LTC only after a person "spends down" his or
her assets to qualify for assistance. In fact, 73%
of American incorrectly believe that Medicare is the primary
funding source for long term care. Families
are at risk of forfeiting hard-earned assets to pay for
a loved one's long-term care needs.
Good Benefit Triggers
Benefit triggers are what cause benefits to start being paid. Your policy benefits should be triggered if you need assistance to perform at least two of the activities of daily living (ADLs), which include bathing, dressing, eating, toileting, continence, transferring (moving from a bed to a chair) and taking medication. Another trigger should be "cognitive impairment," which means coverage applies if you are mentally impaired (with Alzheimer's disease for example) even if you're physically able to take care of yourself.
Home Health Care Coverage
You will want to make sure your policy pays benefits for care at home as well as in an institution such as an assisted living care facility or a nursing home.
Guaranteed Renewable
This feature ensures that you will be able to continue your coverage without undergoing additional medical exams.
Inflation Riders
An inflation rider will increase the benefit amount by either a simple or compound inflation rate each year the policy is in effect. This can be a costly feature, but it is protection against the rising cost of long term care. It provides that the policy is much more likely to pay an adequate benefit in the future.