Long-term care insurance can serve as a powerful safety net for people who become gravely ill or injured. But most people believe this insurance is for someone else, not themselves. They wrongly believe they either won't need long-term custodial care or don't want to think about it right now.
Below is a short quiz so you can test yourself about long-term care.
Questions
1. When is the best time to buy long-term care insurance?
- As soon as you begin your first real job.
- When the kids leave for college.
- When you're 65.
- When you're comfortable, say around 50 or 55.
2. How do insurance companies decide when you are eligible for long-term care benefits?
- Honor system; you tell them you need it, and they pay.
- When it is determined you cannot perform several ADLs (activities of daily living).
- On your 80th birthday, regardless of your health.
- When you've depleted all your savings and your children cannot help.
3. Some of the most common ADLs are: (Circle each one that does not apply.)
- Applying makeup or shaving.
- Bathing.
- Controlling and performing necessary bathroom functions.
- Dressing.
- Cooking.
- Getting in and out of bed.
4. If you are unable to perform some of those ADLs, but have no identified medical condition, you will qualify anyway. True or false?
5. All long-term care policies include coverage for Alzheimer's disease, so you don't have to worry if you can still bathe and dress yourself but cannot remember your address or your daughter's name. True or false?
6. You must be a resident of a nursing home to begin receiving long-term care benefits. True or false?
7. Circle the services below that are not covered under most long-term care policies:
- Cleaning services and personal chef or shopping services.
- Residential hotels with meal service.
- Adult daycare offering skilled care and recreational services.
- Assisted living facilities where personal attention helps residents with personal care activities they cannot do without assistance.
- Licensed nursing care, speech, physical or occupational therapy and health aides.
- Nursing facilities, that is, residential sites for people needing daily medical care.
Bonus question
Everyone should purchase long-term care insurance. True or false?
Answers
1. d. The American Health Care Association recommends purchasing long-term care insurance well before you are most likely to need it, and early enough to save some money on premiums. If you are paying $1,000 yearly for a long-term care policy at age 55, you'll pay nearly twice that if you wait until age 65 to purchase it.
2. b. Under most policies you are eligible for benefits when a doctor certifies that you cannot perform at least two ADLs for 90 days or more. Also, with tax-qualified plans you may be eligible for benefits when a doctor certifies that you need "substantial supervision" as protection for your health and safety due to cognitive impairment.
3. a and e. Generally, applying makeup or shaving and cooking do not apply. Research shows that bathing is usually the first ADL a person cannot accomplish without help. But some policies do not include bathing as a primary ADL, so it is worth checking when you purchase your policy.
4. Depends. Ordinarily, tax-qualified long-term care policy benefits are triggered by a medical condition where a doctor certifies you cannot perform at least two ADLs, without help for at least 90 days. If you are just temporarily unable to perform two or more ADLs, then you may not qualify for benefits.
5. False. Policies issued since 1997 are generally required to provide coverage for Alzheimer's disease as a cognitive impairment. There are some policies, which are deemed non-tax qualified, that may not cover Alzheimer's. Be sure to check your policy to verify this coverage.
6. False. Good long-term care policies pay for several levels of care, including nursing home, assisted living and home care.
7. a and c. Long-term care isn't intended for those whose physical condition allows playing golf, so answer 'c' is out. Many people want a cleaning service and/or personal chef or shopper, but that doesn't mean they have a medical condition that necessitates those services, so answer 'a' is out, too.
Bonus answer
False. If you have significant assets and income you want to protect and you desire to maintain your independence, then you should purchase long-term care insurance.
Those who have limited assets and income shouldn't spend money on long-term care insurance. Fortunately, the U.S. still has at least minimal systems to care for those without substantial means, and compromising an already spartan lifestyle to purchase long-term care coverage does not make good sense.
Give us a call if you would like to discuss Long Term Care Insurance options in more detail.