Insurance Policies For Affordable Long-Term Home Care

Most of the elderly people receive long-term health care at their homes, rather than in nursing homes. But people do not plan for this expense. They also do not recognize long-term care insurance as a feasible choice as it is costly and is often perceived as protection against the expense of nursing home care.

Experts say that this should change. To bring about such a change, these experts say that long-term care insurance industry should focus more on aiding people cover home-based services which would make policies cheaper and more attractive.

Deb Newman, the presidents of Newman Long Term Care in Richfield, Minn., says “It makes sense to insure people for the likelihood of where care is going to be needed first — which is at home.”

Even the industry claims data supports this says one of the country’s leading long-term care insurers called Genworth. Beth Ludden, its senior vice president for long-term care insurance products, says that they are witnessing more people utilizing home care while the percentage of people utilizing nursing home care is on the down trend. He adds that this thought prevails among people that they may need to get transferred to a facility after they begin needing home care. But data shows something else – mostly people are able to remain at home for the entire time.

A report from the U.S. Department of Health and Human Services says that over 6 million elderly American people currently have a “high need” for long-term care. This high need is defined as needing daily support with two activities (transferring from a bed to a chair, continence, dressing, toileting, bathing or eating) for a minimum period of 90 days or a need for considerable support owing to severe cognitive impairment.

The Health and Human Service report projected that some 52 percent of adults heading to 65 years of age will require these services – 14% for over five years; 12% for two to four years; and 26% for two years or less.

Yet less than 10% of the elderly have bought long-term care insurance, which has become less popular over the past decade owing to its hefty price and insurers leaving the market. It is yet to be witnessed whether the industry will solve its main issue – affordability.

People who want to get insurance covering several years of home-based, not nursing home care, can go for less expensive policies which are bereft of those cost-increasing elements, suggests Newman. Policy holders would commonly need to pay premiums for 10 or 20 years before they could claim benefits.

How much home care help will such a policy provide?

In 2016, Genworth compiled some data according to which, a home health aide provided an average annual cost of $46,332, whereas a semiprivate room in a nursing facility cost $82,128. That boils down to availing 44 hours of home care per week, at $3,861 per month. This equals to a bit more than six hours of care, seven days a week.
For seniors with disabling, serious illnesses, that may not be sufficient, but it can relieve the unpaid family caregivers who otherwise would have to serve them round the clock.

What if someone turns out needing nursing home care?

A plan known as “qualified long-term care partnership policy” is available in every state of the U.S. except Illinois, Hawaii, Alaska, New Mexico, Mississippi, Massachusetts, Washington, D.C., and Vermont. This insurance policy entitles those consumers who become seriously ill and need the care of a nursing home for Medicaid, which pays almost half of the nursing home costs.

The eligibility criteria for Medicaid claims in most states is that the value of the consumer’s assets should be $2,000 or below. For couples, this value can be some $120,000. The partnership policy exempts the money received in long-term care benefits from Medicaid’s assets test and protects it from the state’s takeover.

However, Medicaid eligibility is not guaranteed by partnership policies. Consumers would still have to keep up to the income standards set by the state for Medicaid.

David Guttchen, at Connecticut Partnership for Long-Term Care, is not convinced about policies with benefits covering only a part of expected costs. He says that one should know the average costs of home care for his state so as to purchase meaningful benefits. If your policy covers home care alone, you will have certain amount of protection for a while, but going forward, you will have to shell out huge money, if Medicaid isn’t an option.

Michael McDonnell, an insurance broker in Petaluma, California, says it’s a gamble as one cannot be sure about the kind of care he will require in the future, the duration for which he will require care, and the future of Medicaid itself. So, he suggests that it would be wise to consult with an independent financial adviser or elder law attorney before taking a policy.

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