I wish my sister and I knew about long term health insurance a long time ago. Whether or not it would’ve been feasible for my parents is another story. But nonetheless, knowing they could’ve had this option may have saved their money from being depleted to almost nothing. The scary thing about long term planning, is that so many of us have not prepared. Most people who either are not educated about senior care or who are not affected yet (parents are still young) take a non-chalant attitude about it, and think, nursing home or move in with one of the kids!
Problem is, most people don’t know how much a nursing home costs in America. Average nursing home costs top $70,000 /yr or more depending on what part of the country you live in. Also, what experts, professionals and family members are finding is that many seniors do not need the extensive services of a nursing home, yet cannot afford to remain in their own homes without assistance. There are various options nowadays aside from nursing homes. These options include: residential board and care homes, assisted living, continuing retirement communities, and senior apartments.
The Medicare and Medicaid Factors
Many people are misinformed on what Medicare and Medicaid cover. Unfortunately, unless Congress changes this, Medicare does NOT cover long term health care costs and Medicaid only covers nursing home care once a person has exhausted most or all assets and income and are classified as “poverty level” . While Medicare does cover some services at a nursing home facility, (it covered my mom’s month long stay at the Remington Club Nursing Center), it does not cover continuing care and custodial needs. You can find more detailed information about Medicare and Medicaid here at the Medicare.Gov.
One program that Californians have started is the Medicaid Waiver for Assisted Living. It’s a pilot program and therefore, they have only started experimenting with select RBCFs (Residential Board and Care Facilities) throughout the Sacramento and Los Angeles areas to those qualified recipients who would’ve normally gone to a nursing home. You can find more information at the California Assisted Living Association
What does this mean? Typically what you will find covering homes like Residential Board and Care, is that some of the residents pay with SSI benefits. Some facilities accept SSI and will negotiate rates with their residents. Others pay out-of-pocket such as my parents, and others are covered by long term health insurance. At this point, this is the only type of service outside of paying yourself, that will pay for assisted living and residential board and care facilities.
Who Needs Long Term Health Insurance?
Long term health insurance may not be appropriate for everyone. It can be costly and if it causes your loved one financial hardship, you should not get it. It’s probably best suited for people who have large assets that they want to preserve for their children so they do not burden them with the costs of long term care. Keep in mind that if your loved one has a pre-existing condition such as Alzheimer’s or Parkinsons, they probably won’t be accepted by any company.
When to consider Long Term Health Insurance
This is probably something you shouldn’t even consider for your loved one or yourself until you are 60 years old or unless you have a chronic disease. Some unscrupulous agents will push you to signing up for a policy before you even need it. The difficult part in all of this, is that we don’t know if we will need it when the time comes. I’d probably equate this more like choosing life insurance. We don’t know if we will die in the next 20-30 years of our life insurance policy if we choose a term policy. Like life insurance, It goes up as you get older and your health gets worse and the cut-off in purchasing a new policy stops around 80 years old. So, my parents are out of luck on this one! Even if they were young enough, their policy could be around $8K a year.
Also, depending on who you purchase long term health insurance from, your coverage may not be sufficient to cover your care. There are also many restrictions. This doesn’t sound very appealing does it? But, it can serve its purpose and help out if you can afford the premiums.Plus, some insurance companies such as Aviva are now offering critical illness coverage. What is suggested, is that you should wait to apply when you are around 65 years old. It’s also good to buy a flexible policy. You can find more information at Consumer Reports.
This post sponsored by Aviva
