What is Long Term Care? Who Needs It?
What is Long Term Care?
We find one of the biggest barriers to someone choosing Long Term Care Insurance is the fact that it is a complicated product! There are lots of factors to understand, to feel comfortable with the need for coverage, then be able to customize the plan to your needs. Below and in the other pages we try to explain Long Term Care Insurance in simple terms.
First, note that “Long Term Care” is a distinct, separate thing from “Long Term Care Insurance.”
Acute Care
Acute Care is what you receive at the hospital, or doctor’s office, or emergency room… short-term, active treatment by medical professionals (physicians, nurses, etc.) to diagnose and treat your illness or injury.
Acute Care is covered by health insurance, Medicare, Medicaid, Medicare Supplement or Medicare Advantage coverage
Long Term Care
Long Term Care is both medical and non-medical care received in a variety of locations (your home, assisted living facility, nursing home). This custodial care focuses more on helping someone with daily life and care (“activities of daily living”) as an injury or illness prevents them from performing them by themselves.
Long Term Care is covered by Long Term Care Insurance
“Activities of Daily Living”
A term to understand when learning about long term care and Long Term Care Insurance is “Activities of Daily Living” (or “ADLs”). ADLs are just those ordinary activities we all perform each day which are the basics of self-care.
bathing
eating
dressing
maintaining continence
toileting
transferring (in and out of bed or sofa)
We need to be able to perform each of these 6 tasks each day, without help, in order to live an independent life. And most of us do. But if you cannot do so because an injury or illness prevents you, or maybe a cognitive impairment prevents you, you need help, or long term care.
There are also a secondary set of tasks, called “instrumental activities of daily living” (“IADLs”) that people who require assistance with ADLs might also need help with. Examples are preparing meals, housework, taking medicine, traveling locally, shopping, managing finances, and using the telephone. They are not essential for living independently, but they make one’s quality of life much richer.
The “Activities of Daily Living” are what insurance companies that offer Long Term Care Insurance use as “triggers” for who qualifies under the insurance policy for helping to pay for the costs of long term care. Usually the threshold is two… if you cannot perform at least two of the activities of daily living, as observed and certified by your own physician, then you are eligible for benefits under the policy, or payments toward that long term care you receive.
And activities of daily living, and the IADLs, are exactly what that Long Term Care Insurance policy is helping to pay for, for you to be able to perform these basic, everyday life tasks, with the help of another, a professional or family member, in your own home, or some other facility.
Who needs Long Term Care Insurance?
Anyone could need long term care in the future. People of all ages can need long term care, but concentrating on people turning 65, sixty-nine percent (69%) will need long term care at some point in their lifetimes. This percentage is fifty-eight percent (58%) for men, and seventy-nine percent (79%) for women. We have found of three main categories of people who could benefit from choosing Long Term Care Insurance:
Individuals and couples who, needing long term care, would suffer a loss in their retirement savings/quality of life
Most of us are working to fund our family budget, and also to put aside monies for our retirement years. We are utilizing an IRA, 401k, etc. to build retirement income to fund our daily and monthly expenses after we retire.
We are saving for so many “what if” scenarios in our retirement years, and it is tough to save monies to fully fund all of them.
Purchasing Long Term Care Insurance is a way to either fully fund, or fund in conjunction with Social Security and other income, the cost of long term care if needed, so that our family budget in retirement can continue to be funded, and our spouse does not face a different financial future if we needed long term care.
Individuals and couples who think they can self-insure, but would rather their life savings go to their family
We work with individuals and families whose net-worth suggests they could “self-insure” the cost of long term care if one or both spouses needed the help in their lifetimes. And if the need for long term care was short, this forecast may prove wise.
But what if long term care was needed for many years? For potentially two spouses? The average cost of long term care, depending on the kind chosen, is $30,000 to $90,000 a year! Year after year of paying those costs can erode anyone’s assets.
Purchasing Long Term Care Insurance is a way to prevent this scenario, ensuring those assets are given to your beneficiary(ies); spouse, children, grandchildren, etc.
Individuals and couples who are business owners, self-employed, 1099 employee, etc.
Business owners and the self-employed have no choice but to live the “do it yourself” mantra, as all the financial decisions of their family and business rest on them.
And we have found from experience that business owners are trying to save for retirement and possible expenses like everyone else, but too often, when faced with a financial decision… they side with their business, the welfare of their employees, etc. Even if that decision hurts them personally in their financial plan.
Purchasing Long Term Care Insurance is an important, needed step in setting the worry of this possible gigantic cost in their lives aside, with strong LTC Insurance coverage that can handle the cost.
If you would like to continue learning about Long Term Care Insurance click the button to go to the next information page.
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