Rehab Select Blog

Long Term Care Insurance: The Benefits of Being Covered

Posted by Bobby Stephenson

Jan 8, 2016, 8:00:00 AM

Long Term Care Insurance: The Benefits of Being CoveredYou are in a phase of life when you may be wondering, "What are the benefits of long term care insurance?"

Simply put, like car, home, or health insurance, long term care insurance is an important tool that you can use to protect yourself and your family against risk. These insurance policies work to ensure that policy holders will have financial help should they require long term care, such as home care services or a stay in an assisted living center or skilled nursing facility.

What are the Chances that You Will Need Long Term Care in the Future?

According to America's Health Insurance Plans (AHIP), a national trade association that represents health care companies, about 19 percent of Americans age 65 or older will develop some degree of chronic physical impairment. That percentage rises to 55 percent after the age of 85, and AHIP states that by the year 2020, 12 million older Americans are expected to need long term care.

People over the age of 65 have a 40 percent risk of entering a nursing home at some point in their lives, and about 10 percent of them will stay there for 5 or more years. Additionally, the need for long term care is not an issue for older Americans alone. Approximately 40 percent of people receiving long term care services are between the ages of 18 and 64.

About the Costs of Long Term Care

AHIP provides some facts and figures on this subject as well, placing the average annual cost of nursing home care at about $50,000. Home care is more reasonable, but still costly. According to AHIP, employing a home care aide just three times a week for two or three hour visits can easily cost $12,000 per year, and if additional home-based help or therapy is needed, the costs can be much higher.

Assisted living centers charge residents, on average, $1,873 per month for rent and most additional fees, and residents with significant care needs will pay higher rates. Generally very little, if any, of the costs of long term care are covered by health insurance, Medicare, or other government programs. The exception is Medicaid, but this coverage is available only to people who meet federal poverty guidelines – which means any savings you have must be exhausted before they will step in.

The Benefits of Long Term Care Insurance

Long term care policies offer a cost-effective means of paying for long term care, should it become necessary. According to a report produced by LifePlans Inc. and published by AHIP, to pay the same amount of expenses that would be covered by a long term care policy with premiums of $188 a month, a 60 year old individual would have to tuck away $1,666 a month for more than 22 years. Further, setting aside and investing the same amount a person would pay in premiums for such a policy every month for 2 years would result in a nest egg that would only cover 6 months of care. Applying that money to premiums, however, would secure a policy that would cover more than 3 years of care.

Other benefits of long term care insurance noted in the same LifePlans report include more flexibility in obtaining long term care services and better quality of care. People who are insured receive, on average, 35 percent more hours of care than those who are not, and that care is more likely to address their needs.

Understanding Senior Health Benefits

Topics: Aging Patient Healthcare