What does long term care insurance cover?

Long term care insurance assists in paying for care services when you need help with normal daily activities, such as eating, bathing, and moving around – activities most of us take for granted. Long term care insurance also provides supervision as a result of cognitive impairments, such as Alzheimer’s disease. A long term care insurance policy provides different types of care in a variety of scenarios:

  • Skilled care includes nursing care and physical, occupational, respiratory, and speech therapy from licensed professionals that may or may not be needed on a daily basis.
  • Custodial care is the most commonly used type of care. It includes help with day-to-day activities such as eating, bathing, and dressing

Will Medicare or Medicaid pay for my care?

Most Americans, age 65 and older, are eligible for Medicare, but benefits for long term care services are generally limited. Medicare wasn’t designed to adequately pay for home care, adult day care or assisted living care. It does pay for a portion of nursing home care, up to 100 days per benefit period, but only for skilled or rehabilitative services. Medicaid will pay for custodial care in a skilled nursing home, but those rules are governed by each state. And, the Deficit Reduction Act of 2005 made qualifying for Medicaid even more difficult.

Medicaid retains the right to estate recovery under the new law, but it has a new weapon in its aresenla for battling runaway costs, Medicaid can require individuals (but not married copules, if a spouse remains in the house) to tap any home equity in excess of $500,000 to pay for their own care. They can do this by selling the property, borrowing against equity or using a reverse mortgage.

-A Fresh Look at Long Term Care, Kiplinger’s, May 2006

[One] effect of the new Medicaid restrictions will be to encourage people to buy long term care insurance while they are young and healthy.

-A Fresh Look at Long Term Care, Kiplinger’s, May 2006