ZAC AND MARY LONG-TERM CARE 2
Long-term care planning is a very imperative part of life being that getting older is
something that cannot be avoided. Although it can be costly, planning for long-term care in the
present moment can alleviate the cost being too much of a financial burden in the future.
Medicare is a federal program that pays for healthcare for persons age 65 and over and for
people under age 65 with disabilities. (Dalton et al., 2020) Medicare will cover doctor’s visits,
hospital stays, prescriptions and custodial care in a nursing home while recovering from an
illness or injury. However, the stay is limited to 100 days or less. Once that time is up, this is
where the importance of long-term care insurance comes in to play. Long-term care insurance
has coverage that Medicare does not. Having long-term care insurance, one will be able to take
advantage of the following: 1) skilled nursing care, 2) therapy that include occupational, speech
and physical, 3) nursing homes with 24-hour care with room and board, 4) assisted-living
facilities, and 5) home modifications which can include wheelchair ramps, enlarged doorways
and remodeled bathrooms.
Long-term care is not just for elderly people. Injuries and/or illness can hit a person at
any given moment in their life. When a person is no longer able to perform certain activities on a
day-to-day basis, then it is time to consider long-term care. These certain activities or activities
of daily living (ADLs) consist of eating, bathing, getting dressed, using the toilet, transferring
(moving to a wheelchair from a bed), and simple mobility. Not being able to perform these
activities without any assistance means the person is not able to live on their own. These are
factors that will let a person know that long-term care is needed.
There are other factors that influence the need for long-term care insurance. One factor
being the personal risk factors such as the following: 1) life expectancy- the longer a person lives
then the need for long-term care is greater, 2) gender- women tend to live longer than men so
ZAC AND MARY LONG-TERM CARE 3
more than likely they will need long-term care, 3) health history- consider any chronic illness or
debilitating heath conditions that may run in the family and 4) family situation- consider if a
family member will be able to care for the person in need. Another factor is financial status.
Those with low net worth may not be able to afford the premium payments every month. The
moderate and high net worth people may consider this to protect assets.
In the article written by Koop, it is concluded that Indiana is just below the national
median for most types of long-term care. Only the cost of adult day health care is slightly
higher than the U.S. median. Koop also mentions the following:
The median annual cost of a homemaker or a home health aide in Indiana is $57,200
($4,767 monthly).
Adult day health care has a median annual cost of $20,800 ($1,733 monthly).
In Indiana, the median annual cost of assisted living is $51,390 ($4,283 monthly).
At nursing homes in Indiana, the median annual price of a private room is $104,405
($8,700 monthly) and $87,235 ($7,270 monthly) for a semi-private room.
With these costs being what they are, as previously mentioned, it is beneficial to plan for long-
term care as early as possible.
The premiums for long-term care are dependent upon several factors that include age,
gender, health status, area where the person lives, elimination period, inflation and additional
riders. The older a person is, the higher their premiums will be. Married couples may be offered
discounts and lower premium rates. Renewals are guaranteed. However, with the renewal the
premiums are subject to increase if the insurance company chooses to do so. There are different
types of care for long-term care which include the following:
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Skilled nursing care- the level of care that is performed by a RN or LPN, doctor or
therapist.
Custodial care- non-skilled, personal care to help with the ADLs previously mentioned
Home health care- care that is provided at the home as opposed to moving into a facility
Hospice care- for those with that are in the terminal stages of an illness that cannot be
cured
Adult day care- for those who need help but not 24-hour assistance
Assisted living- provided for those who choose to move into the facility and receive help
but are relatively independent
In order to choose the amount of coverage, it is important to know the cost of the different
types of care available. It is important to choose the best policy with the greatest benefits but also
one that is affordable. Consider that policies with longer maximum benefit periods have higher
policy limits and higher premiums. Some coverages to look for in a policy are:1) Alzheimer’s
disease coverage, 2) one year of nursing home and/or home health care coverage, 3) inflation
protection and 4) no hospitalization requirement to receive benefits. When choosing the benefit
period, consider that the longer the period is the higher the premiums will be.
Long-term care policies are a tax-qualified contract as long as certain requirements are met.
Tax-qualified allows for the premiums payments to be tax deductible. Another tax advantage, is
that the benefits that are received from long-term care insurance are tax-free. Even though long-
term care is a great benefit, it may not be suitable for everybody. One alternative to long-term
care is life insurance. A person can borrow form the cash value to pay for long-term care costs.
Another alternative are annuities. These are an income stream for a fixed period of time or for
the life of the annuitant. A reverse mortgage is also another option.
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There are many factors to consider when choosing long-term care. One has to consider their
finances and what type of care they may want and need. Zac and Mary have at least 30 more
years until they retire so they are in a good position to start planning for long-term care now.
Home health care seems to be a good fit for Zac and Mary considering their expenses. The adult
day care would be an option being that they have 3 children who could help care for them.
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References
American Council on Aging. (2023). What is Long Term Care?. Retrieved from
https://www.medicaidplanningassistance.org/what-defines-long-term-care/
#:~:text=These%20activities%20are%20commonly%20called,day%20activities%20on%
20their%20own.
Dalton, M.A., Dalton, J.F., Gillice, J.M., & Langdon, T.P. (2020).KInsurance planning.K(7th ed.).
Metairie, LA: Money Education.
Koop, C. (2023). Average cost of Long-Term care. Retrieved from
https://www.aplaceformom.com/senior-living-data/articles/average-cost-long-term-care
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