Paying for Long Term Care

Just as there are many kinds of long-term care services and supports, so is there a wide range of costs for them. And while some people may qualify for a public program to help pay for these expenses, most people use a variety of options, including long-term care insurance, personal income and savings, life insurance, annuities and reverse mortgages to ensure they can pay for the care they require.  As our population ages, new financial products are offering yet more options.

Costs of Care

Some average costs for long-term care in the United States (in 2010) were:

  • $205 per day or $6,235 per month for a semi-private room in a nursing home
  • $229 per day or $6,965 per month for a private room in a nursing home
  • $3,293 per month for care in an assisted living facility (for a one-bedroom unit)
  • $21 per hour for a home health aide
  • $19 per hour for homemaker services
  • $67 per day for services in an adult day health care center

The cost of long-term care depends on the type and duration of care you need, the provider you use, and where you live. Costs can be affected by certain factors, such as:

  • Time of day. Home health and home care services, provided in two-to-four-hour blocks of time referred to as “visits,” are generally more expensive in the evening,on weekends, and on holidays
  • Extra charges for services provided beyond the basic room, food and housekeeping charges at facilities, although some may have “all inclusive” fees.
  • Variable rates in some community programs, such as adult day service, are provided at a per-day rate, but can be more based on extra events and activities

What is Covered by Health and Disability Insurance?

Many people believe that the medical insurance they currently have will pay for all or much of their long-term care. In general, health insurance covers only very limited and specific types of long-term care, and disability policies don’t cover any at all.

Health Insurance

Most forms of insurance, such as the private health insurance or HMO you may have on your own or through your employer,follow the same general rules as Medicare with regard to paying for long-term care services. If they do cover long-term care services, it is typically only for skilled, short-term, medically necessary care.

  • Like Medicare, the skilled nursing stay must follow a recent hospitalization for the same or related condition and islimited to 100 days
  • Coverage of home care is also limited to medically necessary skilled care
  • Most forms of private insurance do not cover custodial or personal care services at all
  • Your plan may help you pay for some of the copaymentsor deductibles that Medicare imposes. For example, your plan may help cover the $137.50 per day for Medicare covered nursing home care for days 21 through 100

Medigap

Medicare Supplemental Insurance, also known as “Medigap,” are private policies designed to fill in some of the gaps in Medicarecoverage. Specifically, these policies help to:

  • Cover Medicare copayments and deductibles
  • Enhance your hospital and doctor coverage, but does not extend to long-term care coverage
  • Cover the daily Medicare copayment of $148.00 per day for days 21 through 100 for the small portion of nursing home stays that qualify for Medicare coverage
  • Medigap insurance is not intended to meet long-term care needs and provides no coverage for the vast majority of long-term care expenses like care in a nursing home, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

There are 12 standardized Medigap plans defined by federal law.  Find out more about Medigap and see what is covered at the official government website for Medicare.

Disability Insurance

Disability insurance is intended to replace some of a working person’s income when a disability prevents them from working. It does not:

  • Cover medical care or long-term care services
  • Provide benefits once you are over age 65—when you are most likely to need long-term care services

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