New York Estate Planning & Elder Law Blog
Did you know that the cost of in-home care services and nursing home care are not covered items under the Medicare program? According to AARP, the average cost of nursing home stays is more than $100,00 per year in many parts of the United States. A comprehensive retirement plan should include long-term care insurance because costs like these can drain your retirement savings quickly.
What is long-term care insurance?
Long-term care insurance (LTC) helps individuals and couples protect against medical expenses not covered under the Medicare program. Once you or your spouse can no longer perform daily living activities such as bathing, dressing, and eating on your own, LTC insurance typically quicks in to cover in-home care services. There is a waiting period (called “elimination period”) of sorts that applies to most plans before coverage begins in earnest. Check your insurance policy documents for more information.
If Medicare is your primary health insurance, they cover things like hospital stays, medical procedures, doctors’ office visits, and prescription drugs. On a limited basis short stays in nursing homes or some in-home care services are covered under Medicare. Covered services vary by policy.
LTC policies generally cover the following:
- Nursing home stays
- In-home care services
- Skilled nursing care
- Occupational and physical therapy
- Help with personal care
- Alzheimer’s care facilities
- Assisted living facilities
- Hospice and respite care services
- Adult day care centers
- Home modifications (wheelchair ramps, chair lift, or grab bars, among others)
How to keep LTC costs low?
Enrolling in an LTC insurance plan early is the single best way to keep your costs down. Obtaining LTC insurance at age 55 is significantly cheaper than at age 65. Also, talk with your financial planner about avoiding overpaying LTC premiums. Focus on areas where there is a gap in coverage and obtain insurance to fill those gaps. If you are still working, asking your Human Resources department if your employer offers LTC insurance plans. Employer-sponsored plans are offered at discounted group rates, with some employers contributing towards the premium. Even if you leave employment, LTC insurance policies follows you. Keep in mind that it may be difficult to obtain LTC insurance if your health is poor. The premiums charged may be cost prohibitive or you may be denied coverage.
Review your insurance plan documents to get familiar with the covered and non-covered items. For example, some policies can pay different amounts for different services, while others have a flat-rate benefit no matter the service being received.