|  | Healthcare Industry | Health Insurance

Long-Term Care Insurance Facts

The cost of long-term custodial care can be devastating to middle-class families. And in most cases, these costs are not covered by traditional major medical insurance or Medicare. Medicaid does provide some nursing home benefits, but only for those who have spent down substantially all their assets. Short of that, the costs of long-term care for chronic, persistent medical conditions must be paid from a combination of private savings and long-term care insurance.

  1. Average Cost of Long-Term Care

    • The average cost of long-term care in a skilled nursing facility varies substantially by location, but the national average was $198 per day for a semiprivate room as of 2009, according to the Long Term Care Clearinghouse, a website set up by the U.S. Department of Health and Human Services. A one-bedroom facility in an assisted-living facility runs $3,131 per month.

    Structure of Long-Term Care Benefits

    • Typically, long-term care insurance policies pay a maximum daily benefit for a certain number of years. The higher the daily benefit and the longer the time period the policy pays benefits, the higher the monthly premium. Some policies pay for in-home care as well. Generally, for benefits to be payable, the insured must lose the ability to perform two or more activities of daily living, such as moving around, dressing, feeding or using the bathroom. Some policies also pay benefits for long-term cognitive disorders such as Alzheimer's disease. Check your policy for details.

    Inflation Protection

    • Historically, long-term care costs have risen faster than the rate of inflation. Most long-term care insurance companies allow customers to select some form of inflation protection within the policy, such as an automatically increasing maximum daily benefit. Because people frequently hold long-term care insurance policies for years or even decades before they have a claim, some form of protection against inflation can be critical.

    Long-Term Care Partnership Programs

    • Most states exempt certain kinds of assets, such as home equity, from calculating eligibility for Medicaid benefits. This is to allow cash-strapped seniors to keep their homes, even as they collect Medicaid benefits. However, under state Medicaid recovery programs, the state generally takes out a lien against the home and any other assets to reimburse the taxpayer against any expenses paid on the individual's behalf. Some states have created long-term care partnership programs to prevent this, however. Under these programs, if you purchase a long-term care policy, you can exempt the amount of benefits the policy pays on your behalf from the state recovery program. This can help you pass your home on to your children after you die, rather than to state Medicaid officials.

Health Insurance - Related Articles