Although the need for long-term care is on the rise in the United States, the percentage of people purchasing long-term care insurance policies is relatively low. Often this is a result of the price of long-term care premiums. Having a long-term care policy in place offers more choices and more control in long-term care decisions. Knowing what to look for in a long-term policy and buying the policy at the right time keeps premium prices low.
The Need for Long-Term Care
Determining the likelihood for the need for long-term care is the first place to start when choosing a long-term care policy. Your current health or the health of your loved one and what things you are doing now for certain conditions all factor in to your need for long-term care. Individuals with diseases causing deterioration over time, like diabetes, dementia or Alzheimer’s, will likely need long-term care services more than those with fewer issues.
The emotional health and availability of family members to care for loved ones should also be analyzed. If there is a strong network of capable family members to help in the event that long-term care is needed, the decision to get a long-term care policy is less crucial than for those with no close family available.
The financial situation of you and your loved one should also be a primary consideration when looking at long-term care policies. If your financial situation is such that you can pay for long-term care without such a policy, than the need for long-term care insurance is greatly reduced. However, if your ability to pay out-of-pocket for long-term care services is small, then a long-term care policy may be right for you.
Long-Term Care Policy Choices
When comparing long-term care policies, there are several factors to consider. Long-term care policies have limits like other insurance policies, and it’s important to know these limits before making a choice. Some things that should influence your choice are:
- Basic care coverage. Since most long-term care needs come under the umbrella of basic care and not skilled nursing, your policy should include this area. Any policy should provide of list of exactly what basic care needs are covered.
- How much will the policy pay? Long-term care insurance policies are set up on a daily pay system. So you need to know how much long-term care typically costs on a daily basis and how much a particular policy will pay before making a final choice.
- Exclusions to care coverage. Many long-term care policies have a list of covered services that are excluded. Make sure you understand what is excluded from the policy you choose.
- Coverage for home care. Most patients needing long-term care would prefer to remain in their own home if possible. Look for long-term care policies that include coverage for home care, and are not limited to assisted living and nursing home care. In addition, be sure the policy has adequate coverage for home care services. Home care is on the rise, and the industry is constantly changing to meet demand.
- Coverage for certain conditions. Some long-term care policies exclude coverage for certain conditions. Look carefully at the policies your are comparing and make sure your are fully covered for any health condition.
- Allowance for cost of care increases. The cost of health care is continually on the rise and the long-term care policy you choose needs to have yearly cost of care analysis and increases available. If your care policy doesn’t provide for these increases, you won’t be adequately covered.
- Miscellaneous expenses. A quality long-term care policy will include coverage for miscellaneous expenses that are likely to arise when long-term care is needed. Check for inclusion of miscellaneous expenses when comparing long-term care policies.
The Right Time to Buy a Long-Term Care Policy
Long-term care insurance policies, much like life insurance policies, are less expensive when they are purchased early. This is especially true when purchased before certain health conditions arise. If you are considering purchasing a long-term care policy, doing so long before it is needed will save you and your loved ones both time and money.
Most people are aware of insurance in one form or another. Regular payments are made towards the insurance provider, known as premiums, in return for which the insurer agrees to pay out when a specified event or events occur. Sometimes this payment is a one off, lump sum. Other forms of insurance provide a series of payments, providing an income over a defined period. There are many different types of companies now offering these services, leading to an expansion of the market and increased competition
Home insurance is an umbrella term that covers two different types of policy, although many insurers now provide comprehensive policies that cover both bases. Put simply, buildings insurance covers the physical structure of your home, while contents insurance protects the things that you put in it. Combined home insurance policies are often offered at a discount compared to the cost of buying separate buildings and contents policies. An added advantage of this kind of cover is that there is only one insurer to deal with in the event of a claim.
Motor insurance is pretty straight forward in that it is concerned with damage associated with owning and driving a vehicle. Policies vary in scope, from the very basic third party fire and theft to fully comprehensive cover. Third party fire and theft is the legal minimum requirement for driving in the U.K. This basic policy covers the cost of damage to another person’s vehicle in the event of an accident, as well as addressing the self explanatory scenarios of fire and theft. Fully comprehensive cover can allow you to drive not just your car but any vehicle that you are licensed for. In addition, such policies can meet the cost of any repairs required to make good your car, and often also medical treatment and legal cover in the event of litigation.
Critical illness cover is designed to pay out upon the diagnosis of a qualifying illness, such as a stroke or heart attack, and can help meet the cost of private medical bills or loss of income due to absence from work. There are several similar types of policy designed protect your income in the event of illness or unemployment, such as payment protection insurance. Some pay out a lump sum, while others provide a regular income for a specified period. These policies can be quite complicated in scope, and you’ll often need expert advice to be able to determine just which events are covered by the insurance policy.
Travel insurance can provide funds to replace lost and stolen property while on holiday, as well as covering the cost of any medical bills, or changing flights due to unforeseen circumstances. Some policies will cover the cost of the whole holiday if disasters natural or otherwise lead to cancellation, while others will even provide kidnap cover!
Seniors enrolled in Medicare Parts A and B often discover once they become ill that these two Medicare parts won’t pay for all their medical costs. Part A pays most hospital, skilled nursing and some home health care costs; Part B pays most physician, outpatient services and some other home health care costs – but both parts have deductibles, limits and gaps in coverage. Neither pays for any prescription drugs and many medical supplies are not covered.
The private insurance marketplace responded with products designed to cover many costs not paid by Medicare coverage. Products can be chosen to help with cost sharing depending on the need of the Medicare consumer, and seniors continue to be enrolled in Medicare Parts A and B. Plan design and scope are heavily regulated by both Congress and the Centers for Medicare and Medicaid Services to make certain that these plans and products pay exactly what they are required to cover. Seniors can choose from stand-alone supplemental plans and or prescriptions drug plans (Part D), chronic illness special needs plans, or a comprehensive HMO or PPO type plan (Medicare Advantage) that bundles Parts A, B and D together with additional coverage that covers all medical costs and is referred to as Part C.
Each Medicare product is designed to cover different services, and may not be available where you live. While Congress has passed many laws to make the design of these products uniformly specific and the sale ethical and careful, making a choice can be a confusing experience. Here are the basics of a few products:
Medicare Part D Prescription Drug Plan
Part D plans cover most all prescription drug costs, but insurance carriers will offer differing lists of covered drugs and pharmacies. You must be enrolled in both Part A and Part B of Medicare to be eligible for a Medicare Part D plan. The federal guidelines require insurance pays for a prescription after an initial deductible of $320. After this deductible, you pay only a small copay for each drug until drug costs equal an annual total of $2,840, including your copay charges and drug costs. After this $2,840 total is reached, you will will pay any subsequent drug costs for the year (the “donut hole”) up to a total drug cost of $4550, including all costs, charges and copays for the year. During this “donut hole” period, you receive a discount of 50% off the cost of generic drugs, and some insurance companies also offer a discount for brand name drugs. After drug costs have reached $4550, the insurance will pay all drug costs after a small copay for the rest of the year (called Catastrophic coverage). Carriers may enhance their plans to cover the deductible, copays or some of the donut hole but may not offer a plan with lesser benefits than the minimum required coverage. Part D coverage premiums range between $15 and $60 per month, depending on the plan’s design and where you reside.
Medicare Supplement Plans
Supplemental coverage pays some of the out of pocket medical charges (except drug charges) that are not covered by Original Medicare Parts A and B. Medical charges contracted to be covered and paid for by each Medigap plan have been outlined by Congress. The different plans are labeled A, B, E, F and so on up to N. For the outline of each plan’s covered services, go to: Medigap policies . In other words, if you buy a Medicare Supplement F or N from any insurance carrier, each carrier will pay exactly the same for each Medigap alphabet policy. Supplement plans are allowed to vary their premiums and the plan’s provider network, but must cover what the federal guidelines for that specific plan require: no more, no less. Monthly premiums range from $100 to $500 or more, depending on the plan you choose, age when you enroll, and where you reside.
Medicare Advantage Plans (Part C)
Advantage plans bundle Parts A and Part B (and usually D) costs along with other medical services into a comprehensive health insurance plan with varying but limited copays and deductibles. Insurance carriers receive payment from the federal government (through the Centers for Medicare and Medicaid Services – CMS) for covered medical services as well as the Part B premiums paid by members to the government. Plans can be offered as an HMO (Health Maintenance Organization) with gatekeepers and authorizations; a PPO (Preferred Provider Organization) plan, where you can visit any physician, but pay less with network providers; a POS (Point of Service) plan, which is a hybrid HMO/PPO type plan; or a PFFS (Private Fee for Service) type plan where you can see any provider who accepts the plan. Costs and available plans depend on where you live; HMO, PPO and POS plans are typically only available in metropolitan areas due to provider network requirements.
Special Needs and Chronic Illness plans
These plans help offset the significant medical costs related to certain chronic or serious conditions and offer a comprehensive care review and coordination not available in original Medicare. Many people with these long term conditions also may qualify for premium subsidies. Plans and coverages, again, will vary by state and by insurance company.
Review each plan’s options carefully and choose wisely as you may only be able to change your plan once a year. Finding the right Medicare product can offer financial security and save out of pocket charges once a serious illness strikes.