Got Long Term Care Insurance?

Got Long Term Care Insurance? The fourth myth of Long Term Care Insurance is that you already have it. Now don't get me wrong, if you have an actual Long Term Care policy in force, then you have at least some coverage. However, many people mistakenly believe that they have coverage through some other means.

Part of the confusion arises from the distinction (or lack thereof) between skilled care and Long Term Care. Both skilled care and Long Term Care can occur either in a nursing home or at home. However, skilled care such as short-term IVs, physical therapy, speech therapy, and dressing a pressure ulcer are usually covered to some degree by health insurance. On the other hand, Long Term Care such as oxygen therapy for an emphysema patient, catheter maintenance, colostomy drain, and help with the activities of daily living (bathing, dressing, etc.) are usually not covered by health insurance.

The key difference between skilled care and Long Term Care is whether or not the patient is making progress in his or her recovery. Generally speaking, once a treatment becomes necessary to maintain care for a chronic condition, then the patient is receiving Long Term Care and the patient's health insurance will usually stop paying.

Even if the treatment is considered skilled care, there is usually a limit to how long a health plan will pay. For instance, Medicare will currently pay the approved charges for skilled care for 20 days. After that Medicare will continue to pay a portion of the approved charges for skilled care, but the patient will be responsible for a co-pay (currently $133.50 per day) for days 21 -- 100. After 100 days Medicare ceases to provide any coverage for skilled care.

Unfortunately, Medicare is not alone in lacking coverage for Long Term Care. Some of the other plans that provide no coverage for Long Term Care include group and individual health plans, retiree health plans, Medicare Advantage and Medicare Supplement plans, and disability insurance.

What about Medicaid? Medicaid is the usual name for a program jointly administered by the federal and state governments to help the indigent. As far as Long Term Care is concerned, Medicaid has several limitations that may reveal it is not a good option (or not an option at all) for you.

First, you must qualify for Medicaid by having a limited income and below approximately $2,000 in assets. Second, Medicaid will conduct a look back audit (currently 5 years) to ensure that you have not transferred assets to others in order to qualify for Medicaid. Third, if Medicaid finds that you have transferred assets, then it will assess a penalty of time during which it will not pay your Long Term Care costs. There is no cap on these penalty periods. Fourth, assuming you qualify for help from Medicaid your choices for Long Term Care will be limited. For instance, under Medicaid you may not have the option to receive Long Term Care at home, or reside in the nursing home of your choice, or reside in the same facility as your spouse. Fifth, if you receive help from Medicaid for your Long Term Care costs, then upon your decease there is a mandated estate recovery. This means that Medicaid will draw on your estate to reimburse their expenses for your Long Term Care.

Fortunately, you can avoid all of the above limitations and the costs of Long Term Care by insuring against it. If you have already secured a Long Term Care policy, then congratulations! My only advice to you is to make sure you have enough coverage especially if your plan does not include an inflation rider. Keep in mind that a month of Long Term Care that costs $4,500 today will likely run about $12,000 per month in 20 years.