Basics of Long Term Care Insurance

elderly-couplesWhat exactly does Long Term Care Insurance, or LTC cover? Many people believe that LTC only pays for the cost of an Assisted Living Facility or nursing home when you arrive at the point in your life when you can no longer care for yourself. Well, yes, it can function as such, but there’s a lot more to it than that. Did you know that with the right policy you can use your benefits to pay for Adult Day Care, Home Care or even home modification? If you’re like some people you might want to remain in your own home but may need help with daily activities such as bathing, eating and or dressing. Home Care could cost anywhere from $25 to $600 a day, depending on how much care you require and at an average rate of $25 per hour. Or you might need to modify your home in order to make it safe for you to remain there. Your benefits may also be used to cover the cost of doing so.

John and Kay began paying into Long Term Care insurance, separate policies, when they were in their early forties. Over time each had a “pool” of $280,000 with a rider which linked their benefit “pools”. John became ill and the decision was made to have him admitted to a nursing facility where he lived out the remainder of his life. During this time $217,000 of his $280,000 “benefit pool” was used. Having a rider which linked John’s benefits to Kay’s means that Kay now had access to the remaining $63,000 in benefits which remained in John’s “pool” for a total of $343,000 in accessible benefits for Kay.

Shortly thereafter, Kay became unable to dress or bathe herself, triggering*** the need to access the combined benefits. Wanting to remain as independent as possible, she began paying a care giver to provide her with the assistance she needed. Her monthly benefits were over $5,000.

A second scenario – The overall cost of John’s nursing home care exceeded his “benefits pool” of $280,000 Because John’s policy was linked to Kay’s, they were able to access funds from her “pool” to satisfy the additional cost of his extended care.

Average cost of assisted living in Massachusetts – $5,300 per month / $63,600 per year
Average cost of a nursing home in Massachusetts – $250 / $400 per day (average of $350 daily)
$350 x 365 days = $127,750 per year.
Average cost of Home Care in Massachusetts – $25 per hour

***Benefit Trigger – Aside from catastrophic illnesses such as Alzheimer’s Disease, a benefit trigger may be the inability to perform two or more of six activities of daily living such as eating, bathing or dressing, walking, toileting or continence for a period of 90 days.

Lastly, the earlier you begin paying in to a Long Term Care Insurance policy the more you’ll have in your “benefit pool” when you need it. Like other types of insurance, starting late means playing catch up, so It’s up to you to get the ball rolling today. Contact me to answer questions about additional benefits of Long Term Care Insurance.

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About the Author:

Bob Rhodes enjoys a home in Dracut with his wife Andrea and their two sons. He spent the early part of his life in Maine and moved to Massachusetts in 1988 after serving in the United States Army with the 82nd Airborne Division. He graduated from Salem State College (University) with a degree in history. He loves reading, eating good food, going to the movies and traveling. Bob is inspired by the idea of helping his clients fulfill their goals of income security. He is an an expert in the Long Term Care and Health Insurance fields. He has been in the Insurance Field for several years and volunteers his time with local government and Trade Organizations.

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