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If you are younger than thirty-something, you probably haven’t given much thought to Medicare or what kind of long-term care insurance you’ll have in your senior years.  For many of us, our first experience with the bureaucratic maze that is Medicare comes in our forties or fifties when we are helping aging parents navigate their health care options.  That can be a sobering experience as we realize that someday we’ll be facing those same challenges.  And for those looking ahead or living in retirement, the questions about general healthcare and medicare become increasingly important. 

It’s no surprise that healthcare issues are so confusing.  Most of us are still trying to figure out our financial retirement needs let alone examine how much we might need for health care in our senior years.   That’s why Long-Term Care is such an important financial planning issue.  Have you really looked at long-term health care insurance plans yet?  Most of us have not. 

What is Long-Term Care?

In general, long-term care insurance provides financial assistance with physical and/or emotional care for a person who is unable to perform routine activities of daily living such as bathing, dressing, preparing meals, walking, using the bathroom, staying safe in the home, managing the home, etc.  This type of care is continuous and may be due to illness or normal aging conditions. 

What sets it apart from other forms of care is that it is required and necessary, and is usually due to illness, disability or some other chronic health care problem.  Long-term care typically involves a person living in a nursing home or other assisted living care facility that provides specialized medical, social or physical services.  But long term care can also be temporary due to a specific need, and is very often provided by relatives or other caregivers in the home because that’s the traditional way we help family members.  Sometimes it’s the only help someone has.

The vast majority of us live at home in our senior years and have relatives or friends as caregivers when we need help with something.  But at some point, many people do need long-term care and it is very expensive.  Formal long term care costs often range from $30,000 to $60,000 a year or more.  According to AARP, the average U. S. costs for long-term care are:

• $5,566 a month for a semi-private room in a nursing home
• $6,266 a month for a private room in a nursing home
• $2,968 a month for care in an assisted living unit
• $19 per hour for a home health aide 

Those numbers can really add up, and that’s the reason that many financial planners believe that without long-term care insurance, you really don’t have a financial plan.  If you’ve planned for most financial contingencies except for long term care, then what happens when you end up spending your life savings to provide care for a spouse or family member?  If you haven’t planned for that possibility as well, then your financial plan may have holes in it.

Why should you plan for Long-Term Care? 
Because, at least 70 percent of people over age 65 will require some long-term care services at some point in their lives.  And, contrary to what many people believe, Medicare and private health insurance programs do not pay for the majority of long-term care services that most people need - help with personal care such as dressing or using the bathroom independently.  Planning is essential for you to be able to get the care you might need.  Source: National Clearinghouse for Long-Term Care Information

Admittedly however, not everyone needs or can afford to purchase long-term care insurance.  Lets be realistic: Long-term care insurance itself is very expensive. With annual costs around $2000 to $3000 for a basic policy in the early years, those cost may increase as a person gets older.  And it’s not designed as forever care.  Long-term care insurance typically covers a certain period of time, for example a three to five year period.  But it can provide longer care, even over the course of a person’s liftetime, but that will be very expensive.   When do most people get long-term care insurance?  Most financial planners advise looking at it in your early to mid-fifties.  But if you wait until your sixties or seventies, the costs may become prohibitive.  The fifties provide a balance of cost of insurance versus affordability based on income and retirement planning needs.

But it’s important to shop carefully and make sure you knowing what type of long-term care policy you are agreeing to.   From an historical perpsective, long-term care insurance is relatively new.  So are the laws and regulations that govern its use, and practically we are just beginning to see how it works out for people.  The concept is sound, and the need is real.  But as with other insurance products, it may be best to get a second opinion in the early years. 

For those who can afford it, long-term care insurance is just that.  Insurance to provide financial assistance in times of need.  Like many other people, I am learning how hard it is to face these realities.  When you’re in good health in your forties, fifties or sixties, it’s hard to rationalize spending a good chunk of money each month on long term care that you only might need. 

But long term care insurance provides valuable coverage for specific life needs, just as auto or home insurance protects a family from catastrophic financial loss due to accident or disaster.  Long term care insurance protects that same family from catastrophic financial costs due to health care factors that many adults face in their senior years.

And the crux of the issue is that Medicare is not going to take care of most long term care needs.  What does this mean exactly?  Well, Medicare by itself will not meet long term care (LTC) needs because Medicare only covers some home health, skilled nursing and hospice care, all of which have degrees of meaning and definitions.  Medicare does not cover custodial care such as cooking food, cleaning a home or providing nursing home related care. 

Medicare will help pay for home care in certain situations such as:

• A doctor certifies that a patient is homebound, meaning it takes considerable effort to leave the home, and
• The individual needs skilled physical, speech or occupational therapy services, or skilled nursing on an intermittent level (less than 7 days a week) or part-tim (less than 8 hours a day) basis.  If the medicare recipient only needs skilled nursing, they must either need it fewer than 7 days a week (even as little as once every 60-90 days) or daily (seven days a week) for a short period of time (usually 2-3 weeks), and
• The doctor certifies the need for home care, and
• The individual receives care from a Medicare-certified home health agency (HHA).

What about other situations where Medicare does help with long-term care?   Well, if you qualify for the home health benefit, Medicare may cover the following types of care:

1.     Skilled nursing services. Medicare pays in full for skilled nursing, which includes services and care that can only be performed safely and effectively by a licensed nurse. Administration of medications, tube feedings, catheter changes, observation and assessment of a patient’s condition, management and evaluation of a patient’s care plan, and wound care are examples of skilled nursing. Any service that could be safely performed by a nonmedical person (or one’s self) without the direct supervision of a licensed nurse is not covered.
2.    Skilled therapy services. Medicare pays in full for physical, speech and occupational therapy. Physical therapy includes exercises to regain movement and strength to a body area and training on how to use special equipment. Speech-language pathology services include exercises to regain and strengthen speech and language skills. Occupational therapy helps you become able to do usual daily activities by yourself, such as eating and putting on clothes. Medicare will pay for therapy services to maintain your condition and prevent you from getting worse; you do not need to have the potential to improve.
3.     Home health aide services. Medicare pays in full for a home health aide if you require skilled services. A home health aide provides personal care services including help with bathing, using the toilet, and dressing. If you ONLY require personal care, you do NOT qualify for the Medicare home care benefit.
4.     Medical social services. Medicare pays in full for services to help you with social and emotional concerns you have related to your illness. This might include counseling or help finding resources in your community.
5.     Medical supplies. Medicare pays in full for medical supplies provided by the Medicare-certified home health agency, such as wound dressings and catheters needed for your care.
6.     Evaluation services. Medicare pays for evaluation services if performed by a skilled nurse or therapist.
7.     Durable medical equipment. Medicare pays 80% of its approved amount for certain pieces of medical equipment, such as a wheelchair or walker.

Obviously it is best to thoroughly research your situation, talk with an informed health care provider, and seek counseling assistance if necessary.  Did you know that your State Health Insurance Program has representatives available to discuss Medicare related issues with you?  If you have questions or concerns, you can call a toll-free number at this Medicare page and speak to someone within your State about Medicare issues.  These counselors will help you meet a local representative to answer questions if necessary. 

For more information please see the Medicare.gov site on Long-Term Care or the National Clearinghouse for Long-Term Care Information.

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