For years, Richard Payne, a neurologist and cancer specialist who lives in Durham, North Carolina, saw firsthand how patients without long-term care coverage had limited healthcare options.
“Most health insurance plans do not cover long-term care,” Payne says. “They may cover a few days in a long-term care facility as part of a discharge plan, but if you need to become a resident in a long-term care facility because of a health problem, nursing needs, or a disability, those are typically not covered.”
Since most of his patients didn’t have the resources to pay out-of-pocket expenses ($115 per day for a visit from a home-care professional), many turned to family members to pick up the burden.
For that reason, when Payne turned 50 a few years ago, he purchased a long-term care insurance policy. “It was affordable, only about $1,200 a year for the entire benefit, and it gives me choices in terms of where I can go for long-term care.”
Payne saw how long-term care expenses could drain the assets it had taken a lifetime for his patients to accumulate, a reality that compromises BLACK ENTERPRISE’s Declaration of Financial Empowerment Principle No. 6: I will preserve and protect my assets through proper financial and insurance planning. That’s why we’ve developed this guide: to help determine what long-term care means, the costs associated with it, when you need it, and how to get it.
Determining the Need
Long-term care encompasses the personal care and medical services required by people who are disabled or chronically ill. Long-term care insurance typically pays for those services if policyholders are unable to perform two or more activities of daily living, such as eating, bathing, toileting, or dressing; or if they are incontinent or unable to move around. Mentally impaired individuals, such as Alzheimer’s patients, would also be considered unable to manage activities of daily living. Since Medicaid pays for the long-term needs of those with limited incomes and assets, footing the bill for long-term care costs falls primarily on the middle class and the wealthy. And since the wealthy can afford it, it’s the middle class that really feels the load. Health insurance typically does not cover long-term care beyond 30 days, and Medicare pays only for medically essential services such as a nurse’s visit, leaving many sick and disabled Americans with the burden of paying for most of the costs out of pocket.
Without long-term care insurance, “you end up tapping into your retirement, your 401(k), your investments, and your equity,” says DBora Schrett, a Bethesda, Maryland-based agent for New York Life Insurance Co. In more dire circumstances, “you’ve got to sell your car, you’ve got to consider selling the house, or you’ve got to go to relatives that weren’t prepared for this either, which leads to emotional stress.”
Who Is at Risk?
You don’t have to be elderly to need long-term care. “A 20-year-old can walk out the door and be in an accident and need long-term care,” says Schrett. According to the American Association of Homes and Services for