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Information on long term care insurance, how it works, what to look for and look out for in long term senior health care.

Long Term Care Insurance Health

While assessing our health needs for later years we come to the conclusion we'll need some long term care...then we realize we may have to pay for it ourselves.  Many of our health needs after age 65 are covered by Medicare, but it pays only about 100 days of skilled nursing and no assisted living facility expenses. See our page Medicare and Medicaid Use and Abuse for more information. The average length of time a person stays in assisted living is over 2 years...some, over 10 years.  The median cost for this care is $ 3-6,000 per month.  Knowing this, you can expect to pay over $ 100,000 on average, and as much as $ 720,000, depending on the length of stay and care needed.  One of the ways people minimize their financial risk is through Long Term Care Insurance.  Generally, long term care insurance covers costs of your assisted living and skilled nursing needs.  We'll cover how it works and give you some shopping tips.  For more information, here are some recent popular books on long term care insurance.

How Long Term Care Insurance Works:  The Insurance covers a certain amount of assisted living costs, once you need the assisted living.  It works like life insurance, based on tables of life expectancy.  You contract to pay an amount each month to receive a certain monthly benefit, once you need long term care.  The amount you pay varies based on age, gender, and sometimes healthy habits.  For instance, at age 25, you may pay $ 25 per month now to receive $ 1,000 per month when you need care.  At age 45, the same policy may cost you $ 75 or more. You may have noticed the word "need" with respect to long term care insurance.  This insurance doesn't cover optional care.  Optional assisted living is where you decide on assisted living out of convenience.  This happens often when a spouse needs assistance and the other one wants to be close to them.   The insurance will pay for the one who needs it.

The insurance company usually uses a document completed by your doctor to determine if you need assisted living.  The document lists Activities of Daily Life (ADL's) which the doctor states you are able or unable to perform (dressing, eating, bathing, etc.) without assistance.  Most policies will cover assisted living expenses if the doctor says you're unable to perform 4 or more ADL's.  Until you need assistance for the minimum number of ADL's stated in your policy, you won't receive any money from the insurance.  Most policies have a provision to cover added expenses when skilled nursing is needed.    

What To Look For In Long Term Care Insurance: 1.  Count the costs carefully when deciding on long term care insurance.  Insurance companies make money because they collect and invest your premiums in the expectation that the benefits they pay you will be much less than what they receive from you.  If you're a disciplined saver and investor and have some time before you need assisted care, you can do better saving your own money.  See our pages on Financial Management Planning Help for ideas on budgeting and investing.  This book can help Long Term Care Financial Planning.
2.  Make sure the policy states exactly the conditions under which you receive benefits and the amounts of those benefits.
3.  Have the person you've chosen to help with your affairs work with you as you make this decision.  If you haven't chosen someone to do this, see our pages on Elder Care Law
4.  Determine if an assisted living home is what you will want.  If you want in-home assistance, make sure the policy covers it.  See our pages on Assisted Living Questions and Concepts for more information. 
5.  Copy your unsigned contract, highlight what you don't understand, and have a lawyer explain it before signing.  If those offering the plan  pressure you to sign without a lawyer, don't do business with them.
6.  Buy this insurance from someone you have known and trusted for years or from a company you know and trust.
7.  Try to get a policy that will pay extra for special care needs, like Alzheimer's and Parkinson's care.

What To Look Out For In Long Term Care Insurance: 1.  There are many people trying to take advantage of Seniors.  Unlike when we were younger, it really isn't safe to conduct business with someone who just shows up at your door, calls you, or sends you Spam email.  For something like this, make sure you know them or someone you trust can recommend them. 
2.  Make sure the policy provides benefits when you need assistance with 4 or fewer ADL's.  Some companies write policies that won't pay benefits until you've needed assisted living for several years.
3.  Some companies write policies that are vague as to benefits, or have a way for them to escape paying benefits (a poison pill) because of some action or inaction by you.  Your lawyer can identify these.
4.  Some policies make it very difficult to file for benefits so some people won't bother.  Make sure the policy includes a simple way to document your need and file for benefits, and that those benefits will continue monthly unless your status changes. 

Finally, planning for this type of thing can be frightening and depressing.  No one wants to think about the time they won't be able to care for themselves.  I want you to know, no matter how things work out, there is someone who loves you and wants to help you in every area of life.  That someone is God!  If you want help from God, click on God Help Me.

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