For Financial Advisors
Long-Term Care
Q: What is long-term care (LTC)?
A: Long-term care, also known as LTC, is supportive care for people who have chronic health conditions and need help with the basic “work” of talking care of themselves. In the LTC world, this type of work is known as the “activities of daily living” (ADL) and “instrumental activities of daily living (IADL). Long-term care refers to a wide range of services beyond medical and nursing care for people who have disabilities or chronic (long-lasting) illness.
Q: Who provides LTC services?
A: Most of the people who need LTC care—about 85%—live in community settings, such as their own homes and retirement communities, rather than in nursing homes. Family and friends typically provide most of the long-term care for people at home. LTC is also provided by professional caregivers in home, community-based and nursing-home settings.
Q: What does LTC cost?
A: LTC includes a broad range of health and support services that people may need as their functional abilities decline. For many people across America who need LTC, these services are personal care, or help with the “activities of daily living” or ADL and the “instrumental activities of daily living” or IADL. Family members and friends provide these services some or all of the time, usually at little or no cost. But as care and support needs increase, paid care may be needed to supplement family-provided care or provide respite to family caregivers. Some LTC patients may eventually need more extensive services in a facility, such as a nursing home or assisted living center, when family and friends can no longer care for them at home.
Q: Who pays for LTC?
A: Most health insurance plans, including Medicare, don’t cover LTC. The exceptions are Medicaid, some very limited Medicare coverage, some limited VA (Veterans Administration) benefits and private, third-party LTC insurance. Other private third-party insurance, including Medigap, also don’t cover long-term care.
Some individuals will qualify for Medicaid, which is the major payer of long-term care services, but most people will not. There are other federal public programs, such as the Older Americans Act, and state-funded programs that pay for some LTC services, but like Medicaid, these programs are for people with very low incomes and the highest degrees of functional disability.
Privately purchased LTC insurance and VA benefits do cover some long-term care services, but these also contain restrictions, such as waiting periods and financial limits, before you can access those benefits. With LTC insurance, the insurance payout still does not cover the full cost of care. In fact, depending on the benefit amounts of the policy, less than half the cost of LTC is covered, which leaves families to pay for the rest of the cost out-of-pocket. So if you should need long-term care services, there’s a very good chance that you’ll need to pay for some or all of your services through your personal income or other assets.
Determining how you’ll pay for LTC can be challenging, especially if you’re trying to predict how much money you or a loved one may need for care in the future. To help you make the best decisions about how to pay for LTC, take the time to learn and understand what LTC services cost, along with any programs you or your family member may qualify for, what is covered, private financing options available to you, and which ones are the best fit for you as you plan for retirement.
The bottom line: there is no “one size fits all” solution when it comes to planning for LTC needs and costs during retirement. So take your time and learn all you can about long-term care.
Supportive care for people who have chronic health conditions and need help with the basic “work” of talking care of themselves is known as the “activities of daily living” (ADL) and “instrumental activities of daily living” (IADL). These activities include:
Activities of Daily Living (ADL)
- Bathing
- Eating
- Dressing
- Toileting
- Transferring (i.e. bed into chair)
- Continence: Bowel/Bladder Control
Instrumental Activities of Daily Living (IADL)
- Shopping
- Cooking
- Housework
- Managing Finances
- Arranging Healthcare Appointments
- Supervision of Personal Safety
- Using and Managing Transportation
Typically, a person must be limited in at least two of the daily activities in order to qualify for LTC services through service providers and insurance companies. For people with dementia who need supervision, service providers and insurance companies sometimes also consider IADL.
Most insurance plans don’t cover LTC services.
Ordinary insurance, including Medicare, doesn’t usually cover long-term care. But because we’re all living longer than ever, it makes sense to become familiar with LTC now, before you actually need it. You’ll want to think about what types of care you may want for yourself and your partner or other family members before you consider purchasing a long-term care policy.
LTC services can be very expensive when purchased out-of-pocket but, LTC insurance can help pay for many services. That’s why more and more people are considering additional ways to finance LTC, including purchasing LTC insurance.
Q: At what age should I consider purchasing long-term care insurance?
A: The best time to buy long-term care insurance may be during your middle-aged years. That is the when you have the highest likelihood of being eligible for a policy and when premiums costs might be lower. It’s also worth considering if you’re younger than middle-aged and have dependents. Given that 40% of LTC goes to people under the age of 65, you may have a need for LTC at any age.
We’re here to help you make LTC decisions.
At GOODCARE.com ®, we answer some common questions about LTC in our FAQ section of this site. You may also want to download the .PDF file,“The Key Features to Shop for in a Long-Term Care Insurance Policy.” It offers a handy checklist and tips on how to shop for a long-term care insurance policy. Also, we’ve put together a collection of “Helpful Online Resources” with active Web links, many of which are related to LTC. Both of these tools are available as free downloads in our GOODCARE.com Tool Kit™.