Long-term care insurance is insurance that is meant to cover the cost of long-term care services. Care services covered under this type of insurance can include personal care and custodial care provided at home or at a nursing home or assisted living facility.
With long-term care policies, policyholders are reimbursed a daily, pre-selected amount of money to help pay for personal care services. Seniors can use their long-term care insurance to help cover the cost of home care from Assisting Hands® Home Care.
Many seniors hesitate to buy long-term care insurance out of fear that their investment will be wasted if the policy is not utilized. Insurance companies have developed a solution to this situation: combining life insurance with long-term care insurance. A hybrid model provides comprehensive coverage.
As seniors advance in years, they will likely require daily support to accomplish the activities of daily living. However, only a fraction of the elder population buys long-term care insurance to cover the cost of care in the event these aging individuals develop a disability.
As a further deterrent, long-term care insurance premiums can be high for some budgets. Buying into what may seem like a pricey long-term care insurance policy lacks significant appeal, considering that the benefits may not even be used. Consequently, many older people have no interest in a traditional use-it-or-lose-it type of policy.
Does Medicare or Medicaid Pay for Long-Term Care?
Older adults cannot rely on Medicare or Medicaid to help pay for long-term care. Specifically, Medicare will not pay for long-term care, which is assistance to perform the activities of daily living. Someone with cognitive or physical decline will require help with bathing, eating, and dressing, though.
While Medicaid will help pay for long-term care both at home and in skilled nursing facilities, the recipient must qualify. Eligible Medicaid recipients are those who meet a limited income and assets requirement. Income criteria vary by state; typically, individual incomes cannot exceed $2000 per month.
A hybrid life insurance policy is far more appealing to seniors. A combination policy provides long-term care coverage when the need arises; or, if the policy is not utilized to pay for long-term care, the insurance will pay a death benefit.
Combination insurance products are becoming increasingly popular in comparison to traditional long-term care insurance policies. Seniors purchase hybrid policies to avoid paying for two policies, to relieve the angst over long-term care expenses and to utilize their limited financial resources cautiously.
Hybrid life insurance products are available as different options. A linked benefit type of policy links two policies: the life insurance policy and the long-term care policy. A linked benefit coverage is the type of long-term care protection that over 80 percent of seniors purchase.
A life insurance policy may contain a long-term care rider. The long-term coverage must be added at the time the senior buys the life insurance policy—and cannot be added later. This type of policy is ideal when life insurance is more important than long-term care coverage.
Accelerated Death Benefit
An accelerated death benefit may be included in a life insurance policy. The policy holder may receive a tax-free advance on death benefits while still alive. People who are terminally ill, have a life-threatening illness or require long-term care services for extended periods qualify.
Payments from an accelerated death benefit policy can be used to pay for long-term care. The monthly benefit to be used for home care (when specified in the policy) is one percent. If a life insurance policy is valued at $200,000, the monthly payout for home care is $2,000.
Health screening may not be required to qualify for life insurance policies that contain an accelerated death benefit. Although seniors with a health condition may be excluded from long-term care insurance eligibility, they receive such insurance through the accelerated death benefit on a life insurance policy.
Seniors must keep in mind that payouts from an accelerated death benefit policy are oftentimes more limited than the benefits they would typically receive from a traditional long-term care policy. Benefits may also be too short in duration or too low to cover the costs of long-term care.
Elderly individuals with a life insurance policy may elect to sell their policy to raise cash. The proceeds from the life settlement can be utilized to pay for long-term care services. In most cases, only women age 74 and older and men age 70 and older are allowed this option.
When choosing a life settlement, three key factors should be considered. First, the death benefit may be reduced or nonexistent once the policy holder dies; heirs will receive little or nothing. Second, health screens are not required. Lastly, proceeds from the life settlement may be taxed.
A viatical settlement is an option for seniors who are terminally ill. Similar to a life settlement, the viatical settlement is a plan in which the life insurance is sold to a third party. The money from the sale is used to pay for long-term care.
By using the viatical settlement option, the life insurance policy will not pay a death benefit to heirs. The policy holder must have a life expectancy of two years or less. Less than 50 percent of applicants are approved by a viatical company.
In a viatical settlement, the cash amount received is a percentage of the death benefit on the life insurance policy. An individual with a life expectancy of six months has a benefit of 80 percent; someone with a life expectancy of 18-24 months has a benefit of 60 percent.
Seniors who hold a life insurance policy have several options when it comes to paying for long-term care services. When your elderly loved one is in need of quality home care, turn to Assisting Hands® Home Care. Our team of professional caregivers enhance the well-being of senior care recipients.
Assisting Hands® Home Care elder care services are nonmedical yet comprehensive. We provide compassionate in-home support with a wide range of daily activities. Responsibilities include helping seniors with personal hygiene tasks, providing transportation, preparing meals, and giving timely medication reminders.
Our home care options are also flexible. Professional caregivers are available to provide respite care, post-hospitalization care, live-in care, 24-hour care, hospice care, overnight care, and dementia care. We will assess your loved one’s care needs and develop a customized care plan.
Families with elderly loved ones living in Boynton Beach, North Palm Beach, Palm Beach Gardens West Palm Beach, Florida, and its surrounding communities are encouraged to consult Assisting Hands® Home Care for dependable elderly care services. Call us today at (561) 781-5885 to schedule your complimentary in-home consultation.