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What’s Long Term Care and what’s it to me?
By Shane Flait ©2008
Long term care may affect you or your loved one. You
need to know what it’s all about so you can start
taking action based on your circumstance. The issues
of long term care can be summarized in response to
five questions
1.
What does long term care (LTC) mean
2.
Who needs it?
3.
Who provides help for LTC and where?
4.
How much does it cost?
5.
Who pays for LTC
6.
What should I do about it?
What does long term care (LTC) mean?
You need LTC when you need help carrying out your
activities of daily living (ADLs) for the
foreseeable future. For seniors, this means for the
rest of their lives. Examples of ADLs are dressing,
bathing, toileting, eating, transferring from bed to
bathroom and continence.
Who needs LTC?
According to a recent study
by Boston College’s
Center for Retirement Research,
three of four 65 year olds (in 2005) are projected
to need LTC in their future – see table 1.
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Table 1: Projected future LTC needs
of 65 year olds (2005) |
|
Extent of long care needed |
% of projected |
|
No care |
31 |
|
2 years or less |
29 |
|
2-5 years |
20 |
|
5 years or more |
20 |
Who provides help for LTC?
Long term caregivers do. They’re divided into
skilled and custodial caregivers. Custodial
caregivers are aides, volunteers, family or friends.
Generally heath care plans will pay for care
provided by skilled caregivers (medical specialist
like doctors, nurses, etc) and custodial services
but only if given as part of a skilled care
procedure.
You can receive LTC in your home, at an adult day
center, an assisted living facility, a hospice
facility or at a nursing home.
How much does LTC cost?
The cost for typical services for LTC depends on
where you’re living and what you’re receiving for
care. However, approximate annual costs
may be $25,000 for home health care; $40,000 for
assisted living base rate; and $80,000 or more for
nursing home costs. You can see these costs can eat
up a lot of your savings.
Who pays for LTC costs?
According to the study,
overall funding sources for LTC as of 2005, shows
that 18% of dollars spent come from direct
out-of-pocket payments by individuals. Medicaid pays
most but only for those who have almost no assets,
have spent down what assets they had, or had earlier
divested themselves of their assets.
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Table 2: Funding sources for LTC (2005) |
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Entity paying for LTC |
% of dollars spent |
|
Medicaid |
50 |
|
Medicare |
20 |
|
Out-of-pocket |
18 |
|
Private Insurance |
7 |
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Other |
5 |
Only 7% of dollars were paid through private LTC
insurance
What should I do?
You can see that there’s a good chance that you or a
loved one will need long term care most often in the
last stages of their life. And you can see it’s very
costly – especially if you have to pay longer than a
year…indeed for several years.
There are three options for paying for LTC:
1.
Pay it out of your pocket (i.e. your own
savings)
2.
Buy LTC insurance so they can pay it
3.
Let Medicare pay it.
Option 1 – pay it yourself, directly – requires
having a lot of money – or at least going through
everything you have.
Option 2 – purchase LTC insurance. This can be
costly too, if started to late.
Option 3 – let Medicaid pay it. Medicaid will pick
up the cost of LTC for a person but only if they’re
unable to contribute to Medicaid’s expenditures on
your LTC. You can’t just transfer all your assets to
loved ones one day and apply for Medicaid the next.
You need to look into what is the best strategy for
you. Depending on your age and wealth you can find a
strategy that minimizes your loss of wealth for
dealing with LTC. Early planning and early
transferring of assets can save you a fortune.
Shane Flait is a writer and educator. Get more info
at
www.EasyRetirementKnowHow.com
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