“Insurance of any type is a gamble, but, ultimately, insurance provides a level of security and peace of mind,” says Miguel Guerrero, benefits adviser with the American Elder Care Research Organization.
Here, Guerrero offers insight into the sometimes-confusing world of long term care insurance.
Pros and Cons of Long Term Care Insurance
Lest you think you won’t be a candidate for this type of insurance for older adults, Guerrero points out that an estimated 30 percent of Americans will require some sort of long term care during their life. And, despite what you may have heard, Medicare does not cover long term care.
“For middle- and higher-income Americans who are not eligible for VA pension benefits, long term care insurance can be an effective way to save for later-life care,” he says.
The benefits, he says, are obvious: “Policyholders can make a claim against the policy when and if they need it. This is a big help for some because it allows greater flexibility in where they choose to get care.”
On the other hand, long term care insurance does not necessarily provide an all-access pass to health care.
“The policies are written with many restrictions and conditions on making a claim,” says Guerrero. “Most policies have a lifetime cap on their benefits, and also sometimes daily, monthly, or annual caps.”
The good news is that many states are now partnering with the long term care insurance industry, creating incentives for residents to purchase coverage. These partnerships, says Guerrero, typically allow for greater care services and supports than are available to those who do not purchase long term care coverage and instead rely on their savings and their state Medicaid program.
When to Say No to Long Term Care Coverage
However, it’s important to note that long term care insurance is not for everyone.
“For very poor and low-income individuals, a long term care insurance policy might make the least sense,” says Guerrero. That’s because those without wealth will likely qualify for Medicaid, which covers long term care.
And, those who are expecting to be covered by Medicaid should think twice before purchasing whole life insurance, which can be counted as an asset.
“Life insurance policies carry some risks for Medicaid eligibility,” says Guerrero. “These policies can prevent the applicant’s immediate access to Medicaid should a sudden change of events lead to a need.”
In addition, wartime veterans and spouses may also want to forego long term care insurance because of their Veterans Pension. Guerrero says the VA pension works like a long term care policy in that when a senior demonstrates a high level of care needs, the pension amount can be increased accordingly (via Aid & Attendance benefits).
If you’re on the fence about insurance, consult with an elder care professional to determine whether long term care coverage is right for you.
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