The Skinny on Long Term Care
Insurance is a part of living.
It’s a state mandate to have automobile insurance if you own a car. We all want to protect our home in the unlikely event that it is damaged or destroyed. Some of us even insure our pets. And yet, the likelihood of us needing automobile, home insurance and pet insurance protection is far less than the need for us to insure our future long term care.
Long term care is the need for assisted living or nursing home care when living at home is no longer an option because of your health. Health insurance does not cover long term care housing. And if you have any doubts about whether or not you will need it, the U.S. Department of Health and Human Services estimates that 70% of people over the age of 65 can expect to use long term care during their lives. Currently, the average cost of a year’s care in a nursing home in Lehigh Valley, PA is $156,000 or $13,000 per month. So the question is how do you plan for paying for long term care when you need it? There are basically three ways you can pay for long term care:
1 You can self-insure.
This means you will use the assets, savings
and income you have. And if you deplete your financial resources, you can apply for Medicaid which is a government-funded program reserved for people with very limited financial resources. It is important to know that if Medicaid is paying for your long term care, it is Medicaid that will make decisions about your care and where you will be able to move to receive the care you need. If you do nothing to plan for your long term care needs then this is the option you have selected.
2 You can purchase a long term care insurance policy to subsidize the cost of your long term care.
This will help you reduce your out of pocket expenses. And if you purchase it while you are young, the payments for it will be a lot less than if you wait until you are older. Long term care insurance is most commonly sold by insurance companies, and it is not part of the health insurance plan you have. Here’s how it works…you pay the insurance company each year, either monthly or annually, for a financial benefit amount that will be used to subsidize your long term care costs. When you need long term care, the daily benefit amount is paid out by the insurance company to help cover some of the costs you’ll incur.
With long term care policy premiums going up recently, and fewer companies offering long term care insurance, the number of people that have it is reducing. It is estimated that fewer than 5% of people have long-term care insurance. That means the large majority of people don’t have a financial plan for their long term care needs. One other key fact is that even if you have long term care insurance, it is just one part of having a plan. Because your long term care policy is sold by insurance companies, you still will have to have someone make decisions about your care and where you will be able to move to get the care you need.
3 You can move to a Life Plan Community that offers a Life Care Plan.
There are only a handful of communities that offer a Life Care Plan so most people don’t know what it is. A Life Care Plan can only be offered by a Life Plan Community that has health care services and accommodations at the community for residents who live there. In comparison to long term care insurance, a Life Care Plan covers long term care accommodations at 100% of the cost. Morningstar Living’s Moravian Hall Square and Heritage Village, both in Nazareth, PA, are two that offer Life Care Plans. Unlike long term care insurance that is sold through insurance companies, the benefit amount at a Life Care Community is not capped or limited. That means whatever the assisted living or
long term nursing home costs are, the cost is covered in full.
A Life Care Plan provides “peace of mind” knowing you are in control of your future. Not only are you financially covered for the care you may need, but you can select the community and lifestyle you want. And that removes the burden of your care decisions from your children, who have busy lives of their own. Studies have found that people who live in Life Plan Communities live longer, healthier and more vibrantly than those who don’t. Why? Because whole life wellness programs are included for you that keep you socially connected and engaged
with other people, physically active, and emotionally and mentally supported and healthy.
“We moved to a 55+ Community in the Lehigh Valley and lived there for a few years. And when we were in our 60’s, we moved to a Life Plan Community. Many of our friends and family thought we were crazy to move again. But after living in the 55+ community we quickly realized we still didn’t have a plan for our future care. The Life Plan Community where we live now offers an amazing lifestyle that is filled with recreation, fitness, dining, entertainment and continuing education on site. But the real reason we moved to Heritage Village in Nazareth is because we didn’t have long
term care insurance and were concerned about long term care costs that would deplete the assets and savings we worked hard to accumulate.
We have a Life Care Plan now that is preserving and protecting our assets and savings, and we’re enjoying the best lifestyle we’ve ever had.
And the truth is, if we had waited until one of us needed long term care, we wouldn’t be able to experience the kind of lifestyle
we have now.”