No one plans to need long-term care. But the best time to purchase protection is before that day ever comes. And with the high price of long-term care, planning for that expense is a necessity if you want to help protect your retirement savings. In a 2022 report, it's estimated that
Adding long-term care insurance to your financial plan can help protect your finances and give your family choices about how and where care is provided—including at your own home.
Which services does long-term care insurance cover?
Due to a chronic illness, including conditions like Alzheimer's or dementia, disability or simply aging, you may end up needing help with the standard activities of daily living (ADLs). These include getting dressed, bathing, eating, using the bathroom, getting into or out of a chair or bed and walking.
Medicare typically only covers preventive and curative medical expenses and only pays for long-term care in specific circumstances. Medicaid may cover many of these needs, but it has certain restrictions that are based on your income and assets. If your income is above a certain threshold, you would need to shed some assets to qualify.
What does long-term care insurance cover specifically? Here's a look at the services that are typically reimbursed.
Home care
Long-term care facilities aren't always the first choice for those who need extra support. It's common for people to prefer to stay in their home while receiving care.
Long-term care insurance contracts typically cover the cost of a professional home health aide, whether you need assistance with basic living activities or require nursing services. Some contracts even cover care coordination services, caregiver training for your loved ones and respite time for caregivers who need a break.
Most long-term care insurance also reimburses for necessary modifications to your home, including the installation of ramps and specialized bathroom fixtures, which easily can add up to thousands of dollars. Medicare and Medicaid cover only
Assisted living/residential care facilities
When you need assistance with daily tasks and in-home care isn't a viable option, you may consider an assisted living/residential care facility. Because these facilities provide a care-based environment with trained staff, the monthly cost can be steep. Get a sense of what the cost of care is for your state by using our
Long-term care insurance does cover assisted living/ residential care facilities—it may reimburse for all or part of your stay depending on your policy and medical needs. That's important, because Medicare typically doesn't pay for care in these facilities, and Medicaid is only available to adults who meet its requirements for income and financial assets.
Nursing homes & memory care facilities
Nursing homes, which are intended for adults with more significant medical needs, are even more expensive than assisted living/residential care facilities. By covering many of those costs, long-term care insurance can relieve the added financial stress that often accompanies those stays. Some contracts will include a reservation benefit to hold a bed for you if you need to temporarily leave your home.
Should you develop Alzheimer's disease or another condition that causes dementia, most contracts also will cover stays in a specialized memory care facility. Medicare generally only pays for temporary stays in a nursing home or physical rehabilitation facility in particular cases.
Adult day care
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Medicare alone does not typically cover adult day care, though some expanded plans may offset some costs.
Hospice care
Hospice programs provide palliative care to patients with a life expectancy of less than six months. While Medicare generally covers the cost of nursing services, supplies and equipment, patients usually must pay for caregivers out of pocket. Long-term care contracts that include hospice coverage can help offset those costs.
long-term care cost?
widely depending on where you live.
Start by exploring extended care expenses near you,
so you can more accurately estimate the cost of coverage.
Limits to long-term care coverage
When you receive qualifying care under your long-term care contract, the insurer does not typically provide payment for expenses until you first reach the elimination period outlined in your policy. If you have a contract with a 60-day elimination period, for example, you would have to pay for eligible costs out of pocket for that length of time before your policy starts to reimburse you.
Your policy also may have daily, monthly or lifetime caps on the total costs for which it provides reimbursement. These coverage limits may vary based on the type of expenses you incur.
Most long-term care contracts won't reimburse for medical costs such as doctor bills or prescription drugs. And, in most cases, they won't provide payments for services that are eligible for reimbursement through Medicare.
Creating a long-term care plan that works for you
With the array of coverage long-term care insurance affords, you'll gain choice around where you'd receive care. With that flexibility comes more options. You can consider additional riders to tailor your policy or shop around for certain features that best fit your needs.
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