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Long term health insurance (or long term care, LTC) can come in handy for many things that can alter your ability to cope with activities of daily living: a slip and fall, post-surgery recovery time, or a general reduction in one’s ability to take care of oneself either due to age or disease. The cause that necessitates the need for long term health insurance could result in many different types of care being needed.
Generally, the types of long term care required are broken up into two categories:
Skilled Care: Long term health care that must be given by a doctor or nurse because it is of a skilled and medical nature.
Non-Skilled Care: Non-skilled assistance is long term health care that focuses on helping patients eat, dress, use the toilet and conduct other activities of daily living.
Medicare will pay for most short-term nursing home or nursing facilities that provide skilled care. They do not pay for long-term stays or any care that consists of non-skilled assistance. This means assisted living facilities, adult day services, many home health care services, and nursing home stays longer than 100 days are not paid for with your Medicare insurance.
The best way to ensure that you can get the proper care as you age without depleting your retirement savings is to invest in a Long Term Health Insurance Policy.
Long Term Health Insurance Policies
Long Term Health Insurance Policies may be tax qualified or non-tax qualified. Tax qualified policies generally begin paying long term care expenses once you are unable to conduct at least two daily activities without standby or hands on assistance. Non-tax qualified policies may require the impairment to occur in only one activity. In both policies, a cognitive impairment takes precedence over a physical impairment. Having a qualifying need for the use of your policy does not guarantee immediate payment of benefits since most Long Term Care policies have a waiting period, also called an elimination period. This means that you will pay out-of-pocket for the first 30 to 180 days before your policy starts paying. The longer your elimination period is, the cheaper your Long Term Care policy will be.
Although some people refer to it as, “Nursing Home Insurance,” Long Term Health Insurance policies can be very flexible in terms of the health care coverage offered. Some policies cover home care and assisted living care as well as nursing home care. Each policy has a daily maximum benefit allowance, so it is important to make sure that the type of care you choose stays within that allowance—or that you are comfortable with the out-of-pocket expense. Like the elimination period, a lower daily benefit will also help to reduce your premiums. Because the cost of nursing home care is continually rising, many Long Term Health Insurance policies also include an inflation rider that increases your benefit annually to combat inflation.
Another important benefit to consider in your Long Term Health Insurance policy is whether or not it carries a premium waiver. A premium waiver allows the premium for both spouses to be waived when one goes into care.
One last consideration is the insurance company you choose to buy your policy from. Because it may be ten or more years before you utilize the policy, it is important to choose an insurer who has been in the business for many years and has a good rating with Standard and Poor’s. Enjoying your golden years and keeping your wealth is nice, so if you haven't invested in a long term policy, think about it.
I found this one resource guide that will help you navigate the pitfalls of buying Long Term Health Insurance. Click here to learn more: Secrets to Buying Long Term Health Insurance.
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