Do you need long-term care insurance?

Posted: Thursday, September 30, 2010

Modern medicine has allowed more and more people to live longer lives. And yet this blessing has created a problem. Many older people need another person’s assistance with physical or emotional needs over an extended period of time.

This need for assistance is called long-term care (LTC). The National Association of Insurance Commissioners (NAIC) defines long-term care as the kind of help you need if you are unable to care for yourself because of a prolonged illness or disability. It can range from help with daily activities at home, such as bathing and dressing, to skilled nursing care in a nursing home. Long-term care is provided by home care agencies, senior centers, adult day care centers, traditional nursing homes, and continuing care retirement communities. Family members provide long-term care as well.

Many of us will require the services of a medical professional to help us later in life. According to the National Planning Council in 2007, 60 percent of all individuals will need extended help in one or more daily living functions during their lifetime. According to AARP, the average stay in a nursing home is about three years.

Who pays?

The real question is not whether most of us will need these types of services, but who will end up paying for them. With the national average daily nursing home care costing about $181 per day, self-payment is not an option for most people. So, let’s take a look at payment options for nursing home care.

Medicare will usually pay for the first 100 days of care, assuming you had a hospital stay that requires you to go directly from the hospital to a long-term care facility. After that, neither Medicare nor Medicare supplement policies will pay for nursing home health care and related benefits, nor will it pay for home care nursing benefits. Medicaid will only pay for care if you are indigent. Basically you have to be broke to get Medicaid. And if you are not broke now, then you will be after the nursing home takes most of your assets. At that point the government will pay for the care you need.

Long-term care insurance is not for folks who die without needing a nursing home or who need it for less than 100 days. It is optional for those who can pay the approximately $60,000 a year costs of care. Single people who do not care about leaving a substantial inheritance may opt to skip LTC insurance as well. But for the married middle class it’s a necessity because long-term care insurance can keep the healthy spouse from going broke.


Dan Searles and John Stohlman, of Medallion Financial Group, are CFP®’s and Registered Representatives with over 25 years of experience in the financial industry, offering securities and advisory services through National Planning Corporation (NPC), member FINRA/SIPC, a Registered Investment Adviser. Medallion Financial Group and NPC are separate and unrelated companies.  They manage over $250 million of client assets. For further info, questions or comments regarding this article, Dan and John can be reached at 1-800-878-9704 or

Although the opinions expressed are based upon assumptions believed to be reliable, there is no guarantee they will come to pass.  The views within do not express the opinions of NPC.

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