As Americans get older, no plan for the future is complete without considerations for long-term care. Health issues take on new meaning when it becomes challenging to perform basic daily functions, and a progressive condition or even a fall can suddenly change the trajectory of life plans.
According to a study released by the U.S. Department of Health and Human Services, almost 70% of Americans 65 and older will need some kind of long-term care, and of those, almost half will need paid assistance. Many people assume that Medicare will take care of them, without realizing that, outside of limited care after a hospitalization, its scope of coverage does not include long-term assistance.
Although Medicaid steps in for those who are eligible, divesting one’s assets to qualify is not possible for many people. The prospect of draining retirement savings to pay for care is not optimal either. This is where long-term care insurance comes in. The question is, how do you know if it will be enough, or even if it is the right policy for your situation?
What is the difference between traditional and hybrid plans?
A traditional plan is like other types of insurance, with premiums due in exchange for covered services. The trick is planning how much coverage will be necessary, and whether the care will be in the home or in a facility. It is important to carefully examine what the policy covers for daily, monthly and lifetime maximum care, the waiting period before it begins, and also if it offers inflation protection.
Many plans will kick in and no longer require premiums for policyholders who either suffer from dementia or Alzheimer’s, or who can no longer perform at least two of six activities of daily living (ADLs):
- Caring for incontinence
- Transferring from a bed or chair
Many insurance policies offer long-term care along with life insurance or as part of an annuity. Such hybrid plans offer the benefit for a lump sum or several payments, and will drain as the recipient uses the long-term care option or convert to an estate asset if the they do not need it. Many policies also allow full recovery of the lump payment in the first few years.
Which policy is right for my situation?
When deciding which option is best, it helps to think about your unique concerns:
- Financial situation: Not everyone needs insurance, and those with resources can strategize the best way to reserve part of their estate for future health needs. Other people who prefer to prioritize asset protection so they have more to leave for loved ones after they are gone will prefer a long-term care policy. Understanding the scope of its coverage and how they will pay for it are essential considerations.
- Age and health: The longer you wait, the higher the coverage will be. For those with significant health issues, insurance options may be limited.
- Choice of insurance: Doing the research on various plans to find the right one for your situation is a smart way to prioritize your needs, and will prevent an agent from selling you a plan that is not right for you. Group policies and shared care benefits for couples are also available.
People in Oklahoma and elsewhere sometimes feel like they’re gambling with the future when they consider their options. It doesn’t help when the insurance company initially denies the claim, further complicating a health situation that needs immediate attention. It is essential to fully understand the terms and limits of the policy, and also to know how to deal with a company that is acting in bad faith.