Long-Term Care Insurance
Long-term care insurance provides benefits for, as the name suggests, longterm care. What is long-term care, and why is it dangerous to your credit? Long-term care refers to all the services you require above and beyond medical treatments. Some people think of it as home-health care or nursinghome care insurance, and that is a decent place to start.
The need for long-term care is greatest at older ages. However, plenty of young folks find themselves in need as well. According to the United States Government Accountability Office, about 40 percent of people (there are 13 million of them) receiving long-term care are between the ages of eighteen and sixty-four. An auto accident, a sickness, or a disease can easily qualify you for long-term care benefits.
There are a lot of moving parts in long-term care policies. At this point, you should just familiarize yourself with the concept so that you understand how to protect your credit. Then, you can figure out the nuts and bolts of a policy that might be appropriate for you.
Uncovered Services
Long-term care insurance covers services that are typically not covered anywhere else. Your health insurance might pay for surgery after an accident, but they will not pay for your bathing and feeding for five months after the surgery. If you are destitute, you might rely on Medicaid to pay for your nursing home. However, that means you have to “spend down” your assets first, and limit your care to those services that Medicaid will pay for.
How Do I Qualify?
Long-term care insurance kicks in when you are unable to perform certain activities. These are called the Activities of Daily Living (ADLs). If you are unable to perform two or more ADLs, your policy can start paying benefits. The ADLs are:
Dressing
Bathing
Transferring (or moving from one place to another)
Toileting
Eating
Continence
You may also qualify for benefit payments if you are diagnosed with a serious cognitive disease like Alzheimer's.
Long-Term Care Benefits
There are a few ways to receive benefits under a long-term care policy. The most common ones are indemnity benefits and reimbursement benefits. Indemnity benefits pay you a fixed dollar amount each day, regardless of what your actual costs are. Your actual costs could be higher or lower — if they are higher, you have to make up the difference out of your pocket. Reimbursement policies pay you based on your actual expenses, up to a limit defined in the policy.
Depending on your policy, you can receive long-term care at home or in a nursing facility. You may be able to have family members perform the duties, or you may be required to hire people with certain licenses and skills.
