6 July 2013 0 Comments

Long Term Care: What Is It, What Does It Cost And Who Pays For It?

Active RetirementLong term care (LTC) is not the type of medical treatment that is provided by a normal, acute care hospital.  It is care that is required when you are chronically ill.  As defined by most LTC Insurance policies, it exists when that chronic illness prevents you from performing at least 2 of the 6 activities of daily living (ADLs). Namely:  bathing, eating, dressing, transferring (to and from bed), toileting and continence.  Additionally, LTC is defined as when you have a severe Cognitive Impairment requiring supervision due to loss of intellectual capacity.  This includes Alzheimer’s disease or similar forms of dementia.

LTC might be received in a nursing home, the residence of the patient, a residential care facility, a community facility or at a hospice.  The care provided helps you to perform ADLs and may help you maximize your independence and functioning at a time when you are unable to be fully independent.  Your odds of requiring LTC increase with age although there are numerous examples of when it is necessary for younger people.  Take the case of Actor Christopher Reeve who was thrown from his horse at the age of 42 and was paralyzed until his death at age 52.

For those who have reached age 65 there is about a 50% chance that LTC will be needed during their lifetime, with a 14% chance that the need will continue for 3 or more years and a 4% chance that it will exceed 5 years.  The average life expectancy of those at age 65 is another 18.5 years, so there are many years at risk for this need.  The average cost for a private nursing home is $110,000 per year.  The average cost for a home care assistant is $21 per hour.

Who pays for these costs?  Most health insurance does not pay for LTC costs.  Medicare generally provides for LTC only if it is part of a rehabilitative plan or skilled care, and then only for a limited period of time.  Medicaid (MediCal in California) will only kick in after you have spent down most of your assets.  It’s basically welfare.  Savings might be counted on, but they can be depleted rapidly.

There is an added cost of LTC and it is the drain it puts on both the patient, spouse and close family members as they are faced with the devastating loss of personal health and control.

LTC Insurance is available to cover these costs, but you can’t wait until it is needed to buy it.  In my next entry, I’ll provide an overview of LTC Insurance.

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