- is Chronic (versus Acute care) – Conditions for coverage are based on Activities of Daily Living or mental impairment…. which is Personal care, not Health care. It is also referred to as Custodial care.
- is maintenance (supportive) in nature – It is not restorative. Therefore you will also need health insurance.
- is not covered by Medicare.
Three ways to cover personal care needs by insurance:
- Long Term Care Insurance
- Short Term Care Insurance
- Hybrid Options
1 – Long Term Care Insurance (LTCi) covers Long term, not short term care. Coverage benefits range from 1 year to lifetime starting out with elimination periods that act like deductibles. You choose your options and the premium is determined accordingly.
The level of personal care you need is determined by the assistance you require for Basic Activities of Daily Living (ADLs), or cognitive dysfunction, that is expected to last 90 days or more. It could be at home, an assisted living facility, or a nursing home. ADLs are the things many people do when they get up in the morning and get ready to go out of the house: get out of bed, go to the toilet, bathe, dress, groom and eat. A combination of these are called “benefit triggers” because the policy chosen determines whether or not benefits are payable due to the inability to perform a specific number of these six ADLs. Policies vary from one company to another for what constitutes their benefit triggers. If it is 3 out of the 6, then those usually considered are bathing, dressing, and eating. They are not standardized like Medicare Supplements.
2 – Short Term Care insurance (also known as short term disability insurance, or recovery care)
Short Term Care (STC) policies are limited benefit policies that reimburse recovery expenses from short-term events of less than 1 year. This is a good product (and much less expensive than LTCi) to cover personal care expenses incurred by knee or hip replacement, stroke, heart attack, or accidents following hospital or skilled nursing facility discharge during rehabilitation.
STC policies can also be used with an LTCi policy to cover events within the LTCi elimination period since there is no need for a written plan of care and the need for assistance does not have to last for 90 days or more.
3 – Hybrid options: If affordability or eligibility for traditional LTC insurance is an issue, you may be able to obtain an LTC rider on either a Life insurance policy or Annuity.
Please note: Both LTC and STC policies may provide for Personal Care either in a nursing home or in other places such as your own home. Make sure of the details in the policy you choose. I will help you.
Self insuring: Fail to plan and your options are narrowed.
Of course, if not insured against the financial expense of personal care at the time needed, you will have to self-insure. This can be done through savings accounts, retirement funds, or a reverse mortgage, etc. Although it is not recommended to rely on Medicaid assistance, once your financial resources are depleted (your income drops to near the Federal Poverty Level) and your countable assets down to about $2000 in most states, you may then qualify for Medicaid. If you need nursing home confinement, however, Medicaid bed availability can be restrictive. Furthermore, Medicaid rules forbid transfer of wealth to establish eligibility and they have a 5 year look-back to protect Medicaid funds. There is an option under LTCi for some state partnership qualified policies whereby you can protect your estate against full depletion up to the amount of your LTCi protection. Ask me about this if you are interested.