Long Term Care Insurance Polices provide cash to cover the cost of your care when you cannot take care of yourself.

At some point, you may need help to get through each day. Hopefully, you have family and friends to help you, but even they can only help you to a point.

Many people find maintaining their independence and dignity an important value. Consequently, these people find Long Term Care (LTC) Insurance is an important part of their financial planning.

Defining Your Needs

You need to start thinking now about how you will plan for your own care down the road. “Long-Term Care” as a plan has many parts including:

• Where you will live
• What services you will need
• What people you can depend on
• How you will pay for everything
• What legal considerations you need to address

Additionally, part of your plan might also include insurance.

What Can Long Term Care Insurance Help You Pay for?

Long Term Care Insurance can help you pay for:

• Nursing homes & LTC facilities
• In home daily living services
• In home personal services

Who Needs Long Term Care Insurance?

According to New York Life Insurance Company, 70% of people age 65 and older will need help with daily living at some point. Moreover, almost 50% of these people will end up spending more than $107,000 on Long Term Care costs.

Reasons People Get LTC Insurance

Here are a few types of people that need Long-Term Care Insurance:

• Independent people who do not want to rely on their family to take care of them or pay for their care.
• Prepared people that do not have reliable support they can trust to help with their care.
• Determined people that want enough money to cover in home services so they don’t have to go to a nursing home.
• Planning people that do not want to drain their retirement accounts with LTC expenses.
• Finally, people that do not want to end up on Medicaid at any point in their lives.

Does Medicare Cover Long-Term Care?

Many of my clients have asked me if Medicare covers Long-Term Care costs and services. It is a good question, but perhaps not a good answer. The answer is no. Medicare does not cover LTC costs.

Why Doesn’t Medicare Cover LTC?

To start, long-term care has mostly to do with the support and services you will need for daily living and personal care activities. These are not medical services. Consequently, they are not covered by Medicare.

• For example, if you need to see a doctor or medical provider, that is a medical expense.
• In contrast, if you need help using the toilet, that is a long-term care expense.

What About Medicaid?

Medicaid will eventually help you pay for LTC expenses. However, you must be considered below the poverty level before the Medicaid program kicks in.

As an example, my grandparents both lived to be about 87 years old. (Married 67 years!) They had enough money to cover their assisted living expenses for a while, but the last 6 months or so of their lives were spent on Medicaid. They had to do a “spend down” of all of their assets to cover LTC expenses. Once their funds were exhausted, Medicaid kicked in.

In their case, while they had money to spend, they had choices on where they lived and what services they used. However, as soon as the money was gone, they had to move to a place that had “beds” available for Medicaid recipients. As a result, they were moved around a lot in their last year.

On the much brighter side, they were together until the end and passed months apart. They were also happy and loved. So, even though the journey was difficult, we were all in it together. You can read a little more about my care-giving story here.

If you do not want to “spend down” your assets on LTC costs, you will need to have insurance to cover your care costs.

How Does LTC Insurance Work?

LTC is an insurance policy. Consequently, you take it out now to pay for a future event that may or may-not occur.

• First, you pick a plan with an insurance carrier and structure it to fit your needs. This includes deciding how large of a benefit you want.
• In addition, your decision will also depend on how much premium you can afford to pay a month for your policy.
• Premium cost is based on age, and availability of policies are dependent on health underwriting. As a result, not everyone will be able to afford a plan, and not everyone will be able to get a plan. As with most insurance, the younger and the healthier, the better. So, start soon.
• Then, you keep paying premiums until you need the policy. (Or you cancel the policy because you ended up not needing it. For example, you die before you needed it.)

When Do Long-Term Care Insurance Benefits Begin?

First, in order to start using your LTC policy’s benefits, a licensed medical practitioner will need to certify you chronically ill.

According to Mutual of Omaha, being chronically ill means, “You need help with at least two of the six activities of daily living for at least 90 consecutive days or you need continual supervision due to a severe cognitive impairment.”

The government defines Activities of Daily Living (ADLs), as “basic actions that independently functioning individuals perform on a daily basis.”

ADLs Include:

• Bathing
• Dressing
• Using the toilet
• Transferring (to or from bed or chair)
• Caring for incontinence
• Eating

So, you typically need to not be able to do at least two of these to start your benefits.

Do Benefits Start Right Away?

To start, it takes a bit of time to get the right paperwork completed by your doctor, sent in and then certified by the insurance company. Even then, your policy might not kick-in right away.

To keep the cost of LTC insurance lower, many insurance companies will build-in an elimination period. Often, you can decide how long this waiting period will be before benefits begin. Naturally, the longer the waiting period, the less expensive the policy.

Will My Policy Last Until I Die?

Typically, your policy has a set payout rate. This means that it will pay out up to a specific dollar amount. If you outlive this amount, then you will have to use other resources to pay for your care.

How Much will my LTC Policy Cost?

The cost of your policy will depend on your needs, cost of living in your area, your age, your health, and many other factors. To find out an exact cost, you will need to work with an agent to discuss your unique situation.

How Much Long-Term Care Benefit Do I Need?

This is also a question we can’t answer without knowing your needs and situation. If you are wanting a rough idea of what you may need, try out this Long-Term Care Insurance Calculator from Mutual of Omaha.

What are the Alternatives to Purchasing a Long-Term Care Plan?

Long-Term Care Policies are expensive. Additionally, if you wait too long they might not be available to you. One alternative is to spend down your assets until you qualify for Medicaid. If you do not have a lot of assets left by the time you need Long-Term Care, then this may be an option for you.

However, if you have saved money and do not want to drain it all away in medical costs, then you may have another option: Life Insurance.

“As an alternative to Long Term Care Insurance, some retirees consider Life Insurance Policies that have LTC riders or a Chronic Illness Rider. For example, an insurance carrier might offer a product (like an IUL policy) with an option to purchase up-front a rider that will cover long term care events. You can pay qualified long-term care expenses with the death benefit, naturally, before death. Then, when you pass, the insurance company pays what is left to your beneficiaries.”

From Our Article: Do I Need Life Insurance In Retirement.

Conclusions

In summary, long-term care insurance can protect you and your family against the rising costs of assisted living and nursing home care. However, it is expensive. You need to plan ahead to either secure LTC insurance early on, or find another option like life insurance with LTC riders.

• To discuss your options with a licensed agent, you can call me, Carly Cummings – the author, if you live in Nebraska or Iowa.

• If you live in any of our other fine states, please see this page to find an agent near you.

The post What is Long Term Care Insurance? appeared first on Medicare Life Health.

No one wants to make a mistake that will cost them hundreds (or thousands) of dollars down the road if they can help it! However, Medicare can be very confusing, and even very knowledgeable people can miss things. Here are the five biggest Medicare mistakes people make, and how you can avoid them!

#1 in Our Biggest Medicare Mistakes: Missing Enrollment Deadlines

Although the government gives us all a little wiggle room around each Medicare Milestone we pass, there are certain deadlines you must mind to avoid late penalties and inconveniences.

Original Medicare Coverage Deadlines

You will need to sign-up for Medicare when you turn 65 if you are not already getting Social Security. You will be automatically signed-up for Medicare if you are getting Social Security. In addition, you will need to tell the government if you are delaying Medicare because of other credible coverage (such as an employers coverage).

You will have three months before your birthday to sign-up, the month of you birthday, and then three months after to sign-up. However, what some people do not understand, is that if you enroll after you turn 65, your coverage will not start until the first of the month after you enroll. This could lead to a gap in your health care coverage.

A NOTE ON CREDIBLE COVERAGE: Some people will delay Medicare coverage if they have a good health plan from their employer. This is usually okay, but there is an exception for small business employers to be aware of: If your employer has less than 20 employees, you will need to enroll in Medicare right away when you turn 65.

This is because when you work for a small business, their insurance will become secondary insurance and Medicare will be your primary payer. If this is the case, you will need to enroll right away in Medicare to avoid a penalty. (Also note that Cobra is not credible coverage.)

Medigap Guaranteed Enrollment Deadlines

The last Medicare Enrollment Mistake people make is missing their Guaranteed Enrollment period for a Medigap Plan. You will have six months, from the beginning of the month you first turn 65, to enroll in a Medigap plan with a guarantee to be issued a policy. If you apply after this window, you will have to go through medical underwriting. This means that companies have the right to deny issuing you a policy based on your medical history after your open enrollment is over.

It is important to remember that Medicare Advantage Plans have a different enrollment process than Medigap. The Medicare Advantage Annual Election Period is not for Medigap Plans. Which lead us right into Mistake #2…

Medicare Mistake #2: Not Understanding Medigap Plans vs. Medicare Advantage Plans

There are two main ways you can set up your Medicare Health Care Plan: Medicare Advantage (Part C) and Original Medicare with a Medigap Plan. You either have one or the other, not both. Both can be good ways to set up your health care, but not understanding how they work can lead to making on of our biggest Medicare mistakes.

We have a whole article on Medicare Advantage vs. Medigap Plans here. I suggest reading it if you are unfamiliar with the two plan types. Considerations with these plans include how you get your Prescription Drugs and how you want to budget your money. Cash flow can be different plan to plan with premium payments and out of pocket expenses to consider when making a decision. Your lifestyle needs and travel patterns also need to be considered when making a choice between MA and Medigap.

Mistake #3: Assuming Your Doctors and Drugs are Covered

We all know what assuming can lead to… mistakes! It is very important to make sure that your doctors are covered with the Medicare option you choose. The carrier will be able to help you confirm that you will be able to continue with your current doctor if you so desire. If you are working with an Insurance Agent, they will have the ability to do this for you as well.

Checking your drug options with a plan is also an important part of finding coverage. The government does make sure that at least two kinds of drugs are available per category of treatment. Moreover, carriers will have a process for you to make an exception for a drug not on its list (called a formulary). However, it makes for a smoother transition to check ahead of time to see what is covered for your specific needs.

Biggest Medicare Mistake #4: Assuming Medicare Covers Long-Term Care

It is a common mistake to assume that your Medicare coverage includes long term care – it does not. Skilled nursing facilities for recovery from a certain event are covered (and come with different co-insurances based on different plans). However, long term stays in assisted living and nursing homes are not covered. You will need to have a plan in place to cover these needs. Your planning may include:

• Long term care insurance
• IUL policies with long term care (or critical illness) riders, or
• Self-insurance (paying cash).

Another option, for those that do not have a lot of resources saved up for retirement, is to “spend down” your assets to qualify for Medicaid to help you in paying for your care. However, I would not suggest this option for those that have the means to plan ahead for the level of care they desire or those that want to pass money on when they pass.

Biggest Medicare Mistake #5: Enrolling Directly with a Carrier

Ok, follow me on this one. When you first turn 65, you are bombarded with advertisements for different Medicare plans. Sometimes, it feels easiest to just pick up the nearest postcard and give that insurance company a call. Or maybe you have done your research on your own (which is just fine!) and decide to enroll directly with the carrier you want to go with. Here is where you should stop and consider this as a mistake.

Here is the problem: when you enroll with an insurance company for one of their plans directly, you have to deal with them alone. On the other hand, when you enroll with that same company through an independent insurance agent, you now have an advocate and support system to help you work with that carrier.

Here is how an independent agent helps:

• First, if something goes wrong, you can call your agent for help! You are not on your own, and this is a big deal. As we all know, everyone can make mistakes – you, your doctor’s office, your insurance company. When these mistakes happen, you can call your agent for support and they can work with you and the insurance company to make sure you are taken care of.

• Second, rates and plans change! A good independent agent will keep on top of industry changes and plan changes for you. They can stay on top of your premium rates and what might be new or changing in your area to make sure you always have the best coverage. You will not get this level of service when you work directly with a carrier.

• Finally, you do not pay anything extra for working with an independent agent. They are still paid as an independent agent from Whichever company you are placed with at no charge to you.

Medicare Mistakes Summary

In addition to this article, another great resource is the Medicare and You book put out by the government. Since this is a large (120 page) document, we have created a Medicare and You User’s Guide for you to read and reference here.

In summary, you can avoid the biggest Medicare mistakes with a little research and a little help.

Reach out to a professional to answer any of your market specific questions and find out more about Medicare, Medicare Advantage, Medicare Supplements, and their differences here on MedicareLifeHealth.com.

Further Reading:

• What is Medicare Plan F?
• Is Medicare Plan F Going Away?
• 2020 Plan B Changes
• 2020 Medicare and You Guide

The post 5 Biggest Medicare Mistakes appeared first on Medicare Life Health.