Long-Term Care: Traditional Solutions
According to studies from the Urban Institute and the U.S. Department of Health and Human Services, 70 percent of Americans who reach age 65 will require long-term care during their remaining years. Although some people will get by with unpaid care from family members and others, nearly half will need some paid assistance, and around 24 percent will need more than two years of paid care, and 15 percent will spend two-plus years in a nursing home.
The costs of care are highly variable, depending on how long you require it, where you live and how intense your needs are. The ways to pay for services vary as well. At Stagecoach, we offer our clients a variety of options as part of our initial consultation.
Traditional Medicare, the public health insurance program for people over 65, does not cover long-term care beyond some skilled care right after hospitalization for an injury or illness. Plans can offer supplemental coverage for services like meal delivery and rides to medical appointments, but it is limited.
You can choose a little coverage or a lot to help pay for services in or out of your home. Typical policies spell out how much you can receive daily or monthly, up to a lifetime maximum or a certain number of years. Different amounts may be allowed for care in your home, a nursing home or elsewhere. You pay extra for benefits that rise over the years to protect you from inflation.
You also can choose from policies with varying waiting periods between the time you start needing care and when benefits kick in. A typical waiting period is 90 days, but you can pay more to get benefits after 30 days or pay less to accept a 180-day delay. Likewise, you pay more for a policy that pays out $200 a day, lasts five years and grows benefits at a compounded 3 percent per year than you would for one that pays $100 a day for two years with no inflation protection.
Policies may limit what conditions they cover. For example, it’s not unusual to deny care for alcoholism, drug addiction or war injuries. And while a preexisting condition, such as heart disease or a past cancer diagnosis, may not stop you from getting a policy, the policy may not cover care related to that condition for some period after it goes into effect.
Generally, though, you become eligible for benefits once you canno longer execute a certain number of the so-called activities of daily living — such as bathing, dressing, eating, using the toilet, getting in and out of beds and chairs, and managing incontinence — or become cognitively impaired. At that point, premiums typically are waived while you receive benefits.
But if you stop paying the premiums before the need arises, you usually lose the coverage. And if you never use the coverage, the insurance company keeps and invests your money to pay for other people’s claims and reaps a profit.