The Facts of Long Term Care Insurance
You are taking an important step towards securing the financial future for you and your family. Your greatest financial risk today and in the foreseeable future is not your hospital or doctor bills, but the very high cost of long term care.
Over 40% of all Americans over the age of 65 will spend some time in a nursing home due to a prolonged illness or disability. That’s almost one out of two. Will it be you or your spouse? Your risk of needing long term care is probably much greater than you realize. Assistance may be needed on a temporary or permanent basis for performing such daily activities as bathing, dressing or cooking.
Care might be provided in an assisted living facility, an adult day care center or a hospice. Or it might be provided in a nursing home, an extended care facility, or in your own home. You may need long term care services if you have an illness or injury and you’re not able to perform one or more activities of daily living at home, or you have accident causing a nursing home stay, or you are stricken with Alzheimer’s Disease or senility.
In 1983, Medicare began a new program called the Prospective Payment System. Instead of reimbursing hospitals for the actual cost of treating patients, this program now pays a set fee according to 467 Diagnostic Related Groups, or DRGs. Once a patient reaches the arbitrary number of days in the hospital, Medicare payments stop regardless of the individual patient’s actual condition or the need for continuing care.
When Medicare payment stops, patients are released from the hospital as quickly as possible. Most patients must then finish their recovery from illness or injury in some type of nursing home facility, or, when possible, arrange for nursing medical services in their own homes.
With Medicare covering only 2% of the bill, the cost is overwhelming for most. The National Association of Insurance Commissioners (NAIC) explains: “Purely custodial care (the type of care most persons in nursing homes require) is not covered by Medicare or most Medigap policies. The only nursing home care that Medicare covers is skilled nursing care that is provided in a Medicare-certified skilled nursing facility.”
Just one year in a nursing home can cost $36,000 to $60,000. Currently, the average cost in a long term care facility in America is $41,000 per year. The average cost of a visit by a home health aide is $52. Daily visits would cost you almost $19,000 per year. Skilled nursing at home, to administer medication or oxygen, for example, five days per week for a year would cost you an average of $94 per visit, or $24,440 per year.
It’s no wonder that half of all elderly people living alone will spend themselves into poverty after only a thirteen-week stay. And Medicaid will only pay for home health care and nursing home care if you are already “poor” or literally impoverish yourself (and your spouse).