Money, Health, and Other Things

Educational Blog in the Area of Family and Consumer Sciences for the Middle Peninsula


Risk Management and Insurance Basics, Part XV

Over the next two weeks, we’ll discuss long-term care insurance.

What is long-term care insurance?

Long-term care insurance is an insurance policy that helps cover the cost of home health care and nursing home stays. According to the U.S. Department of Health and Human Services, someone surviving to age 65 has about a 70% chance of needing long-term care as they age, with 24% requiring long-term care for more than two years.

You may be thinking, wait, won’t I have Medicare (a federal health insurance program for people 65 and older) when I retire? While it’s true that anyone 65 and older that has paid Medicare taxes for at least 10 years, which is part of the FICA taxes automatically taken out of your paycheck, will be eligible for Medicare, Medicare will often not pay for home health care or nursing home stays. Medicare may pay for “skilled” nursing care, however, more often than not, long-term care stays are considered “unskilled” or “custodial”. Medicaid, which is a public health insurance program for low income households, may pay benefits for nursing home stays at a Medicaid approved facility, however, this program is only eligible for those with few or no assets – with applicants only allowed their primary residence (up to a certain value), one vehicle, no more than $2000 in countable assets, and a few smaller exceptions.

With a long-term care policy, when am I eligible to receive benefits?

Required assessments are typically made prior to benefit payments. These assessments generally look for one of two things:

– Are substantial services required to protect the individual from threats to health and safety due to substantial cognitive impairment, such as late-stage Alzheimer’s disease?

– Is the individual unable to perform two of the seven “activities of daily living” for at least 90 days due to loss of functional capacity? These activities include eating, walking, moving from a bed to a chair, dressing, bathing, using a toilet, and bladder and bowel control issues.

We’ll return next week to conclude our discussion on long-term care insurance.