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Because of old age, mental or physical illness,
or injury, some people find themselves in need of help with bathing,
controlling bladder and bowel functions, using the toilet, eating,
and moving in and out of a chair or bed. These six actions are called
Activities of Daily Living, sometimes referred to as ADLs. In general,
if you can’t do two or more of these activities, or if you
have a cognitive impairment, you are said to need “long-term
Many people think that long-term care is provided
exclusively in a nursing home. It can be, but it can also be provided
in an adult day care center, an assisted living facility, or at
Custodial Care vs. Skilled Care
Assistance with ADLs, called “custodial care,” may be
provided in the same place as (and therefore is sometimes confused
with) “skilled care.” Skilled care means medical, nursing,
or rehabilitative services, including help taking medicine, undergoing
testing, or other similar services. This distinction is important
because Medicare and most private health insurance pays only for
skilled care, and not custodial care.
Most major medical health insurance policies do not
cover long-term care expenses, nor does Medicare or Medicare Supplement
insurance. Long-term care insurance is about the only option that
allows people to protect their assets and retain more control over
their health-care decisions in this late-life situations. Those
who do not have this preparation often have few alternatives but
to spend down their assets until they qualify for Medicaid.
Should I buy long-term care insurance?
The average cost for one year in a nursing home is $40,000,
but can be close to $100,000 in some big cities. Round-the-clock
care at home can be just as expensive. Medicare does not pay these
bills beyond a short period of time after a hospital stay. Health
insurance rarely pays any of the cost. Unless you have so little
money that you will qualify for Medicaid, or so much money that
you can pay the bills out of your own pocket, you should consider
long-term care insurance.
Reasons to buy long-term care insurance
- Preserve your assets for your family instead of
spending the money on long-term care.
- The odds are one-in-three that a man over 65 will
need long-term care; for a woman over 65, the odds are one in
- New rules make it hard to qualify for Medicaid.
- Premiums may be partially tax-deductible.
What’s the best age to buy long-term
In general, it's a good idea to buy long-term
care insurance before you’re 60. The younger you are, the
less likely it is that you’ll be rejected when you apply for
the policy. The premium is likely to be lower the younger you are
as well, and once the premium is set, it stays at that amount for
the life of the policy, unless the claims for the group of people
who have bought that type of policy require that rates for the group
Under what conditions will the policy
begin paying benefits?
The policy should state the various conditions that must
be met. The common conditions are listed below:
- The inability to perform two or three specific
ADLs without help.
- Cognitive impairment. Most policies cover
stroke and Alzheimer’s and Parkinson's disease, but other
forms of mental incapacity may be excluded.
- Medical necessity, or certification by a
doctor that long-term care is necessary.
features of long-term care policies should I pay particular
- The best policies pay for care
in a nursing home, assisted living facility, or at
home. Benefits are typically expressed in daily amounts,
with a lifetime maximum. Some policies pay only half
as much per day for at-home care as for nursing home
- A benefit period that may range
from two years to lifetime. You can keep premiums
down by electing coverage for three to four years,
longer than the average nursing home stay, instead
- A waiting or "elimination"
period. Premiums will be lower if you pay for an initial
period of care yourself instead of electing first-day
- Inflation protection is an important
feature, especially if you are under 65 when you buy
benefits that you may not use for 20 years or more.
The best inflation provision compounds benefits at
5% a year.
- Guaranteed renewable policies
must be renewed by the insurance company, although
premiums can go up if they are increased for an entire
class of policyholders.
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IMPORTANT NOTE: This Web site provides only a simplified description
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limits and losses not covered, be sure to read the policy, including
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