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Long-Term Care

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Making Sense of Long-Term Care Insurance
By Cheryl Smith, MA

(Page 1 of 3)

Although your focus is probably on providing care for your loved one, itís important to think about and prepare for your own future caregiving needs. Long-Term Care insurance (LTCi) is a hot topic these days as the more than 76 million baby boomers approach retirement. Statistics say that one out of every two elderly Americans will need long-term care, yet unfortunately, most baby boomers have done little in terms of planning for the care they likely will need in the future.

With the increasing population of elderly Americans, longer average life spans and increasing costs of health care, itís wise to consider LTCi as an option for when youíll someday need extra care yourself.

Planning for Long-Term Care

LTCi is a separate insurance policy that covers costs that arise when an individual needs on-going care including home care, hospice care, nursing home care or care in an apartment in an assisted-living facility.

Although LTCi probably isnít high on most Americansí lists of priorities, it probably should be. Statistics show that 72 percent of elderly Americans are impoverished after paying for one year of long-term care.

The average cost of a private room in a nursing home in the U.S. is $69,400 a year according to the Genworth Financial 2005 Cost of Care Survey. And if an individual wishes to remain in his/her own home, versus entering institutionalized care, the national average rate for a home health aide is $18.58 an hour or $446 a day for round-the-clock care.

If you think that the government or your health insurance will cover these costs, youíd better think again.

The majority of long-term care costs are not covered by Medicare or most health insurance plans. Medicare only covers skilled and rehabilitative care (doctors and nurses) and does not cover custodial care including help with activities of daily living (ADLs). Medicaid will cover the cost of care but only after an individual has depleted all their assets.

Many elderly Americans end up relying on family members to provide care. Some end up depleting all their assets and going on Medicaid resulting in a coverage that restricts where an individual receives care. With a little planning and available funds to cover LTCi premiums, most Americans can avoid burdening their family with their long-term care needs and still leave some assets behind.

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