What is Long-Term Care? Who may need it?
Long-term care is the care a person needs when they have either a disability or an on-going illness. It includes both medical care and help with your personal day-to-day needs, such as getting in and out of bed, cooking and dressing.
Most long-term care is provided in the home by family members. Over time, however, such work can take a toll on caregivers. A condition may require skills that a family member doesn’t have. Also not everyone’s family can dedicate themselves to care over an extended period.
Not everyone needs long-term care. A recent U.S. Department of Health and Human Services study, however, found that people age 65 and over have a 40% chance of needing a nursing home. Of those who enter a nursing home, about 10% will need to stay there for at least five years.
Long-term care can be expensive. While Medicare covers a limited amount of skilled care (such as dressing changes), it leaves most of the cost up to you. The national average cost of a shared room in a nursing home, according to a 2005 study by MetLife, was $176 per day. This is over $64,000 a year.
Kiplinger’s Retirement Report found that nursing home costs vary widely, depending on where you live. In 2003, the annual cost ran from $35,900 in Louisiana to $166,700 in Alaska. The report found that facilities in large cities cost more than did those in rural areas.
Medicaid does provide long-term care for those with little or no financial resources. For more details on this assistance, refer to our feature on Help for People with Limited Income.
It’s easy to see that the rest of us might want to consider long-term care insurance. Even if you have the resources to cover nursing home costs, you may not choose to spend your savings that way. Planning ahead is also important since your premiums are generally lower if you start your policy at a younger age.
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Factors to consider in comparing long-term care insurance plans:
- The cost of care in your area (or where you plan to retire)
- Your monthly retirement income
- How much help would you need each month?
- Does the policy cover inflation?
- An annual increase is built into some plans.
- Does the plan cover care in your home as well as in a facility?
- Is the insurance company strong and reputable?
The policy won’t do you any good if the provider is no longer around when you need the care. Contact your State Insurance Department to check on a company or see the list of carriers we recommend.
Is there a cap on daily coverage?
Since costs may vary from one day to the next, it might save you money to choose a plan with a monthly, rather than a daily, cap.
Is long term care ever tax deductible?
There are two types of long-term care (LTC) insurance policies—“Tax Qualified” and “Non-Tax Qualified.” You should consider each type carefully, in terms of the care it covers as well as the taxes you might save.
Tax Qualified Policies allow you to deduct a portion of your expenses from your federal (and sometimes state) taxes. A limitation of these policies is that they have specific requirements for when you can receive benefits. Specifically, you must need at least 90 days of care and require help with 2 or more daily activities.
Non-Tax Qualified Policies are not tax deductible. They are, however, more flexible in when they provide you coverage. Usually these policies will pay if a doctor simply states that a patient needs medical care.
Request an instant Long-Term Care quote from Health Insurance Carriers in your area >>
