The Small Print of Long-Term Care Explained

"If I would have known I was going to live this long I would have taken better care of myself!" That funny line isn't so funny when you're facing a health crisis without the funds to deal with it. Health care costs go up as we age but fortunately we now have some financial tools to help. Now we can make those golden years more comfortable; both physically and financially. Here's one vehicle... Long-term care insurance (LTCI). But don't hop on this insurance product until you really understand what you're getting into. Like any insurance policy, we learn how well it works when we really need it. Here are some of the fine-print considerations to examine if you are looking at any form of long-term care insurance (LTCI).

Long-term care is often considered an issue exclusively for elders. Not so. A person who requires continuous care because they are unable to independently perform basic daily living activities such as dressing, bathing, or eating due to an injury, illness or in some cases, cognitive disorders may be a long-term care candidate. Being able to afford long-term care is something that concerns many of us. One way to deal with the unpredictability of long-term care costs may be long-term care insurance (LTCI).

Hopefully you'll live a lively, long, and prosperous life and any concerns of health or money issues will not get in the way of enjoying simply marvelous golden years. But, if you want to be prepared, consider how to make long-term care insurance work to your advantage. Don't count on Medicaid. It does cover some of your long-term care expenses but you've got to be practically near death or totally broke to qualify. Then there's your friendly neighborhood HMOs, Medicare, and Medigap but guess what. Right. They don't help much either.

Here are three things you can do to get over your anxiety about this whole not-so-fun question of "How long will I live and can I afford it if I do?"

1. Eat your dang vegetables! Your mother was right. They are good for you and they keep you healthy. In other words, get with a fitness plan, clean up your diet, kick the smokes, and see if you can't add a few more healthy years to your life before long-term care insurance becomes a really big issue.

2. Make a ton of money. Yup, your mama told you, start saving your money early. If you did as mama advised and got yourself some of that thar financial plannin' stuff then yer in dang good shape. If not, it's never too late to start with some basic planning and investing.

3. Buy some long-term care insurance. Nobody likes paying those insurance premiums but the right kind of long-term care insurance could make a huge difference when the going gets tough.

Eat your veggies, fill up the piggy bank, and buy yourself a long-term care insurance policy. The first two are relatively easy; the last one comes with a few more complexities to deal with. Get with an agent you trust. Get a referral from someone in the legal or financial fields. Here is some of the even finer print to watch for when it gets down to the nitty gritty of policy comparison:

1. Elimination Complication... Or, as our insurance brethren call it, the Elimination Period: This is that period of time prior to your insurance policy paying out any kind of benefit. They typical options range from 20 to 100 days. This is also referred to as a waiting period. Make sure and ask your agent to clarify what your elimination period is and have him explain the cost/benefit considerations of making it longer or shorter.

2. Time Crunch... Or, as the insurance industry puts it, Duration of Benefits: The top-end limits placed on the benefits a policy holder will receive. This may refer to limitations such as predetermined set amounts of money or specific time parameters of one or two years etc. Again, it's important to compare these benefits to other financial capabilities and resources available to you.

3. Daily Bread... Or, as the insurance industry feeds it to you: Daily Benefit: This is the actual amount of daily coverage you will select as your benefit. This usually ranges from about $50 to as much as $350 each day. Also keep in mind the cost of living in your neighborhood. Health care in a small town in North Dakota may be less costly than health care in Los Angeles. Your agent should be able to give you some guidance on this.

4. Easy Rider... Or as our insurance friends call it, Optional Inflation Rider: The term used to describe the method of protection against inflation.

5. Had-That-Bug-Already... Or better known as Those Pre-existing Conditions that we-ain't-gonna-cover-rule. The insurance provider will require a waiting period (in some cases 6 or months or more) before full coverage goes into effect on treatment for pre-existing conditions. This will vary from company to company.

6. Home on the Range... Or, our insurance folks refer to this as Range of Care: In other words, this coverage may vary depending on the level of care employed. Some care might be at a basic custodial level, an intermediate level or a highly skilled level. The facility will also have a range-of-care definition that the insurance agent should thoroughly explain. The nursing home is one price. The assisted living facility is another. And of course, the home care is still another price. Maybe a little complicated but this each of these services has different costs and various levels of service. Therefore they all have their own unique price tag. Ask for clarification on this.

7. Jacking Premiums... Or, also known as Premium Increases: Your long-term care insurance policy will have terms that explain, if, how, and when those monthly premiums will go up. Reality check here. There is rarely an "if" but almost certainly a "when." Of course your costs will go up, just make sure you know how much and if you have any options when they do. Can you change the coverage you have if premiums go up or are you locked in? Ask your agent.

8. To Know me is to Renew me... Or more commonly referred to as: Guaranteed Renewability: This is a policy agreement in long-term care insurance policies that allows you to renew it and maintain coverage even though you may have had changes in your health.

9. Amazing Grace Period... Or to put it another way... The Grace Period for Late Payments: When you're a late on a premium payment you're asking for trouble. This is how much time the company will allow before they do something mean like cancel your policy. It is wise that you don't put your grace period to the test. They may not always have the same warped sense of humor that certain article writers do.

10. No Debate Rebate... This is a pleasant change... money back? How? It's called the Return of Premium: This is the little clause that says you may get some of your money back if you haven't used your policy for a certain number of years. Please notice, we did say... "May get some of your money back."

11. Bed Pan Ally... Commonly known in the insurance world as Prior Hospitalizatoin: This is the tiny little clause that indicates whether or not you must stay in a hospital before you qualify for long-term care insurance benefits.

It's obvious there's a lot to know about long-term care insurance so do your homework early. Please oh please make sure and check with your attorney, accountant, financial planner or other professional on this important but complicated topic. Not everyone needs or qualifies for long-term care insurance so ask a lot of questions and don't forget to eat your dang vegetables!

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