Financing Options for Long Term Care
Older people should think of long term care seriously because in few years they will need some kind of care that might leave them miserable and impoverished. Most of these elders face problems in paying for their long term care, since the costs of both institutional and residential care are the costliest types of care.
Financing long term care services is the biggest problem many American seniors are dealing with these days. This spurs the states and the federal government to establish programs that will address this problem.
The following are the options on how you can finance your own long term care:
Private LTC Policies – Getting a private insurance for long term care is the first thing you would consider. LTC policies are available from private insurance companies in different states. There is no fixed price for each policy, because the premiums are based on age, health issues, state, and length and other features of the coverage. The premiums increase together with age; thus, younger policy holders receive cheaper premiums than their older counterparts.
Private policies normally cover variety of facilities — home, nursing home, assisted living facility, and adult day care. Also, most insurance companies offer features such as inflation protection, which increases the daily benefit either simple or compound; elimination period, which is the number of days you’ll be paying out-of-pocket before the company kicks in; and benefit period, the period (normally designated in the number of years) the company will pay the insurance coverage.
Partnership Policies — Many Americans think that Medicaid and Medicare will save them from paying everything for their long term care needs. This is also the reason why many residents are not planning for their retirement. Unlike what they have expected, Medicaid will not pay any single amount unless they have depleted their assets, and distinguish themselves among the poor. This means you have to be literally poor before you qualify for any Medicaid coverage.
The Congress come with program that promises to overhaul this loophole in Medicaid; thus, the Long Term Care Partnership Program was created. Four states initiated the program, but later on more than 30 states joined the program to support the federal government’s effort of Medicaid’s budget on LTC and to help residents plan their on long term care needs. The most remarkable feature of Partnership policy is the Asset Protection or Disregard. This feature allows consumers to retain assets more than Medicaid’s limit but still qualify for coverage. Medicaid allows consumers to keep assets equal to the benefit amount paid under the policy.
CLASS Act –The Community Living and Assistance Services and Support Act is the newest program that President Barack Obama signed in 2010. the effective date will be on January 1, 2011. The budget will come from the funds paid by voluntary members and not from tax payers. Members will give $50 a day that will be put up in a trust fund, but the amount of premiums is yet to be determined by the Department of Human Affairs. The amount that will be paid by members is not that expensive, but it could, at least, give them protection when long term care needs arise. Those who were rejected by private insurers due to pre-existing health condition may still qualify for CLASS Act, without undergoing any underwriting process.
