Long-term Care Insurance: Why It’s Not Just For “Old People”

Even in today’s world, healthy eating and exercise only go so far. The natural course of aging ensures that one will have his or her share of unexpected maladies and ailments. When disaster strikes, the last thing you and your family need to worry about is “how will we afford long term care?”

Take, for example, the average annual costs of long-term care that older consumers face in today’s market. Be aware that cost of care may vary depending upon geographic location and type of care required.

• Nursing Home (Private Room): $102,200/year or $8,500/month
• Assisted Living Facility: $48,612/year or $4,051/month
• Home Health Aide: $52,624/year or $4,385/month

What is Long-term Care and Insurance?

Various services can be provided under long-term care include nursing facilities, home-based care services and personal care—such as assistance with everyday activities—and respite care, for example.

The goals of long-term care differ from other forms of traditional medical care. Long-term care insurance covers medical care programs that are directed at maintaining the consumer’s quality of life through the various services listed above, rather than curing the illness or condition. A consumer is eligible for coverage under such plans when the consumer is unable to perform two of the most common Activities of Daily Living, which include bathing, dressing, toileting, transferring, continence, and eating.

Importantly, Medicare and other types of health insurance usually do not cover expenses of long-term care, requiring the consumer to pay for care out of pocket or with Medicaid funds if he or she qualifies.

The Earlier the Better

Consumers in their late forties to early fifties should strongly consider investing in long-term care insurance. In the case of long-term care insurance, the motto “the earlier the better” is very fitting. This is because consumers must “health qualify” for coverage or face higher premiums or denial of coverage. Pre-existing conditions will likely significantly impact one’s ability to qualify for coverage. In fact, a mere diagnosis rather than actual disability can result in a declined application. Therefore, buying coverage while you are in good health is imperative. The benefits of applying earlier include the following:

• Premiums- Premiums for long-term care are directly related to the age of the consumer. Thus, the younger you are, the cheaper the premiums and vice versa. Long-term Care insurance providers often provide discounts for consumers who have a track record of good health.
• Locked-in Discounts. Once a consumer purchases long-term care insurance, any discount he or she received for good health is preserved. There is no change in the premium you pay if your health later declines.
• Rate of Acceptance. On average, there is a 30% decline in traditional long-term care insurance applications for consumers in their 60s to 70s.

Medicaid Considerations

While the fine details of the Medicaid application process are beyond the purview of this post, some points will be highlighted here. Most importantly, there are both income and resource (asset) limitations to qualify for Medicaid. In Colorado, an individual can have up to $2,000 in resources to qualify.

Luckily, Colorado has partnered with long-term care insurance providers to protect more of the consumer’s assets when later applying for Medicaid. For each dollar that Partnership qualified plans payout to the consumer, a dollar of personal assets is protected, or disregarded, for purposes of the Medicaid resource limitations. For example, if an individual receives $100,000 in long term care benefits, then that same individual can disregard an additional $100,000 worth of his or her assets for purposes of qualifying for Medicaid. This is a great incentive to invest in long-term care insurance.

Contact Our Attorneys Today

For more information on long-term care insurance, contact Jorgensen, Brownell & Pepin, P.C. to speak with an experienced attorney.