By Jack Rosenberg
If you or a loved one has reached the age wherein once simple activities have become increasingly difficult, then your probably already aware of how intensive and pricey some of the necessary proceedings are. Needless to say, you are not the only one dealing with this unfortunate predicament. Studies show that nearly 10 million individuals over the age of 65 are requiring some sort of long term care. This number is constantly growing and is expected to exceed ten million individuals in less than ten years time. Central to the increasing need for long term care are the families of the loved ones who require it, as the family itself normally assumes a caregiver role. Individuals and their families have the option of applying for long term care, but need to identify this unique insurance’s pros and cons. This article offers help to those considering long term care and those who already are utilizing it by identifying a general definition of what LTC is, contrasting details between health insurance and long term care, and necessary costs.
When you purchase a long term care policy, the benefits that it offers come into play when the policy holder needs coverage for care after they’ve become unable to do daily activities. Examples of certain coverage include nursing home facilities (whether they be in home or out of home), assisted living, Altzheimer’s facilities, and more. The majority of individuals who acquire coverage provided by long term care have illnesses that are not traditional. Meaning, the person in need of care cannot do activities that were once a part of their regular routine such as eating, dressing, bathing, or walking on their own. The benefits of long term care typically go into effect when two or more of these activities cannot be completed on the individuals own, usually for at least 90 days.
Health insurance vs. Long Term Care
Typical health insurance varies from long term care on grounds of caregiver compensation, with the insurance agency directly funding the caregiver’s operations. Long term care, however, has different financial terms. LTC requires that the policy holder first pay for care on their own. Once they’ve funded whichever service needed, the insurance agency reimburses the individual so long as they can provide proof that services were rendered. In addition, an elimination period is attached to long term care policies, which is a length of time where a person is required to pay for care before the individual pursues a claim for reimbursement. This waiting time can be as short as less than a month (20 days minimum) or as long as four months. Typical elimination periods are three months time. Elimination periods can be tedious, however often times a longer elimination period will result in lower premiums.
You can expect some of the same cost patterns of insurance with long term care as you would see with other insurance products. The more you pay in premiums, the more coverage you’ll have. For instance, you’ll pay more for five years of coverage than you would for two years of coverage. In addition, the amount of money you’ll need to spend depends on both the insurer and the policy chosen.
The time at which you choose to buy long term care has heavy cost implications. With that being said, the ideal age to buy long term care would be mid 40’s to early 50’s because purchasing early can secure lower premium rates. The rates that you receive earlier on are lower, but are not guaranteed to remain the same. Meaning that the insurance provider doesn’t have the power to raise the individual rate, but they are granted the right to raise the rate of blocks. Raising the rate of blocks means that more often than not, you’ll end up paying more as you get older because the older you get the more likely you are to file a claim.
An optimal outcome of long term care products is most likely if you have a legitimate emergency fund for two reasons. The first is that this fund will provide money on hand to pay for care before the care is even needed. The second is so you can self insure, which often delineates you from expensive premiums upon purchase.
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