When hearing the words "long-term care," you may have some initial reactions regarding its purpose, usefulness and relevance.
We've noticed that the common perceptions surrounding long-term care aren't always true.
To help eliminate any confusion you may have, we're addressing four of the most frequent myths we hear about long-term care.
Myth No. 1: Medicare/Medicaid will pay for my long-term care. We hear this one a lot, but it likely won't be true. Medicare may help you pay for a short stay in a skilled nursing facility, for hospice care or for the costs associated with home health care. However, they will only cover these costs for a maximum of 100 days.
After that, you're on your own for 100 percent of the costs incurred from staying in a skilled nursing facility. And if you're banking on Medicaid, it's unlikely you'll qualify for assistance. Since
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Medicaid is means-tested, your assets have to be depleted to a very low level before the government will step in and help you pay for your long-term care bills. This level varies on a state-by-state basis; you should contact your State Medical Assistance office to see whether you qualify for assistance.
Myth No. 2: Long-term care insurance only covers nursing homes. Long-term care and nursing homes have almost become synonymous, but the fact is that nursing homes are only one service that long-term care insurance covers. In addition to nursing homes, long-term care policies typically cover home health care, hospice care, respite care and Alzheimer's care facilities, among others. A long-term care policy allows you to seek the type of care you'll need without cracking your nest egg - whether that be in a nursing facility or remaining in your own home.
Myth No. 3: I won't need care. No one can say with any certainty whether they'll need long-term care, and it's certainly possible that you may not end up needing care. But the odds that you will end up requiring some form of long-term care may be significantly higher than you think. The Department of Health and Human Services estimates that someone turning 65 today has a nearly 70 percent chance of needing care, and the average person needs care for three years. With the cost of care exceeding six figures annually in some parts of the country, it's an expense that can rapidly deplete your savings if you need prolonged care and don't have coverage.
Myth No. 4: I'm too young to buy a policy. In order to avoid paying premiums before making use of the benefits, the temptation is to put off purchasing a policy for as long as possible. This opens you up to the risk of seeing your premiums skyrocket, or worse, becoming unable to get coverage. Just as you wouldn't be able to purchase homeowner's insurance if your home was on fire, you won't be able to purchase long-term care insurance if you already need care. If an long-term care policy makes sense for you, we recommend buying it while in your early- to mid-50s.
While this column will hopefully clarify your misconceptions about long-term care on a more general level, you'll likely still have unanswered questions regarding whether purchasing long-term care insurance is right for you, and what type of policy is most suited for your needs. That's where talking to your financial adviser or an long-term care specialist can be a valuable resource to help you ensure you're making the best long-term decision for you and your loved ones.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com .
