Long Term Care Insurance - Act Now Before it is Too Late: long-term care

A misconception is that long-term care is covered either by health insurance or by Medicare. Health insurance does not pay for long-term care and Medicare, Part A, will only cover the first 20 days of long-term care 100%, but only under certain very restrictive condition. Beyond the first 20 days, Medicare requires you pay the first $133 (2009) of expenses per day and this limited coverage only lasts for 80 day. Then you are on your own.

The sad fact is that long-term care, when properly planned for, can be a manageable process that leaves the family relationships in tact and allows us to instead act in an oversight capacity, rather than in a hands-on custodial care capacity. Stress is significantly reduced, our jobs do not suffer, and our direct family unit stays in tact as well.

Long-term care refers to assistance needed by anyone for a chronic illnes. A chronic illness is long-term illness that will not go away, such as Alzheimer's, Parkinson's, emphysema, arthritis, diabetes, heart disease, a stroke which affects physical activities permanently, and sudden accidents which leave you permanently disabled. Long-term care may require skilled medical care or non-skilled medical care (custodial care).

Skilled medical care is often performed by licensed medical professionals such as physicians, registered nurses, licensed practical nurses and physical, occupational or speech therapists in a home, community or institutional setting. It also includes assistance with administering medicine. Skilled medical care is usually required when there is an acute condition that restricts an individual's ability to perform certain physical task. It may also be required where a debilitating condition turns into a chronic (permanent) condition which can no longer be ignored.

Non-skilled care, or custodial care, is generally needed where a physical condition impairs someone from performing what are called activities of daily living. Such activities include eating, bathing, dressing, toileting (assistance to and from the toilet), continence (bowel movement control issues) or transferring from a bed to a chair etc. Most often, non-skilled care is informal, meaning performed by family member. In fact, about 80% of all long-term care is informal, while 20% is provided by paid, trained professional. The reason for this is that most families do not plan properly for long-term care, meaning they do not have the financial resources to pay someone to assist the family in providing long-term care service.

Non-skilled care typically includes homemaker services and personal assistance. Homemaker services refer to assisting the patient with home-related activitie. It may include preparing meals, managing money, shopping, housework and the like. Personal assistance services involves assisting the patient in the performance of activities of daily living, It includes feeding, bathing, dressing, transferring the patient to and from the bed and a chair, help in the bathroom and perhaps even changing bed pans and the like. When our patient is heavy or tall, these tasks require the assistance of a loved one who has the physical strength to meet the challenge. If no such loved one exists, one must somehow be found. Oftentimes this requires paying for the services of a provider who has the physical strength needed. This costs money.

Inadequate planning means that whatever financial resources are available will be used to help assist our disabled family member get through each day. Often retirement assets are diverted to pay for long-term care service. This means there will be less money for retirement need. Eventually, our retirement assets dry up and the only other option is transferring our loved one to a Medicaid facility. Some are very good, but more often than not, our loved ones will not receive the care we all feel they deserve. It's a no-win situation and everyone in the family unit is negatively affected. Who wants to put their parent in a Medicaid facility due to financial limitations? I know I wouldn't. But it happen. It happens every day and with the graying of our baby boomer population, it is going to become a common occurrence to those who did not plan properly.

What can you do? The key is to properly plan for your long-term care needs while you are in your 40's or 50's by securing the services of a Certified Financial Planner or long-term care insurance agent. It is in these age groups that long-term care insurance is most affordable. Premiums for a 45 year old can be as low as $1,000 per year. The cost goes up dramatically as you get closer to 60 years of age. A 65 year-old can pay as much as $8,000 per year for long-term care insurance. Proper planning means designing a long-term care policy that meets you minimum need. Some policies pay a daily benefit for 2 years, 3 years, 5 years or for life. Obviously the longer the term, the higher the premium. A typical long-term care policy usually carries a three-year benefit payout term, includes an inflation adjustment component and a reimbursement daily benefit. The daily benefit needed depends on the cost of care where you live. A daily benefit in the northeast of $150-250 is not uncommon. Most policies reimburse on a days of service basi. This means services must be provided in order to receive a reimbursement. Most policies also include an elimination period of between 30 days and 90 day. With a 30 day elimination period the patient must pay for long-term care services for the first 30 days, unless the care qualifies for Medicare.

The best advise I can give you is to secure the services of a Certified Financial Planner, or an insurance agent who is certified by the Corporation for Long-Term Care. Either can craft a long-term care policy that is affordable and meets your need. Remember, each year you put off planning for long-term care will cost you in higher premiums and exposes you to the risk of needing long-term care.

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxe. Tom is founder of the Rich Habits Institute and author of "Rich Habit.

Author Bio:
Tom is a Certified Public Accountant, a Certified Financial Planner, President of Cerefice & Company, CEO of The Rich Habits Institute and author of the groundbreaking self-help book â€œRich Habitsâ€. Tom works with clients every day, helping them become wealthy, manage their money, plan for retirement, save for college, safeguard their assets (life insurance/long-term care) and assist them in setting up IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing ... [More]

You can also reach this article by using: insurance, long-term care