At some point in your life you may consider adding long-term care insurance to your overall estate plan as a way to prepare for the likelihood that you, or your spouse, may need long-term care in the future. While long-term care insurance can be a wise addition to your plan, it is essential to understand how the benefits work and what exclusions apply before committing to a policy. As with all decisions related to your estate plan, consulting with your Missouri elder law attorney is always the best way to obtain specific advice and guidance regarding an addition to your plan. It may help, however, to gain a better understanding of how St. Louis long-term care insurance works.
Will You Need Long-Term Care?
Most of us hope we will never need long-term care; however, the odds are stacked against us. The longer you live, the better the odds become that you will, ultimately, need long-term care (LTC). About the time you retire (age 65), you will stand a 50-50 chance of eventually needing LTC at some point down the road. If you are fortunate enough to still be here at age 85, those odds will increase to a 75 percent chance of needing LTC before you die. Why will you need LTC? Because although advances in medicine and science have provided us with a better quality of life and a longer average life expectancy in the U.S., a way to halt the natural aging process has yet to be discovered. As such, as we age, so do our minds and physical bodies. Eventually, the deterioration of your mind and/or body will likely require you to have around the clock care, hence the need for long-term care.
Can You Afford St. Louis Long-Term Care?
Long-term care insurance appears to be an attractive option for many people because of the high cost of LTC. Nationwide, a year in a long-term care facility averages about $80,000 as of 2016. While residents of Missouri pay a bit less, on average, at just over $60,000 a year for LTC, the cost of LTC is still much more than the average person can afford out of pocket. Moreover, the cost of LTC is expected to continue to rise in the years to come. Experts predict that LTC expenses in Missouri will increase to about $116,000 a year over the next 20 years. With an average length of stay of 2.5 years, it becomes easy to see how LTC expenses could wipe out your nest egg virtually overnight.
Won’t Your Health Insurance and/or Medicare Cover Your LTC Expenses?
In a word – no. Unless you purchase a separate long-term care rider with your basic health insurance policy it will likely exclude LTC expenses. Likewise, Medicare will not cover LTC except under very narrow circumstances, and even then only for a short period of time. For over half of all seniors, Medicaid is the only viable option for help covering the high cost of LTC expenses unless they have a long-term care insurance policy.
How Does Long-Term Care Insurance Work?
Long-term care insurance works the same as your basic health insurance coverage, in principle. There are, however, several important differences that you need to understand. The idea behind long-term care insurance is that it will step in and cover your expenses if you need LTC. While you should always have your estate planning attorney review a policy before you purchase it, there are three primary aspects of any potential policy that you should consider right away:
- When does the policy start covering your expenses? Most LTC polices will consider your coverage to begin when you can’t do at least two out of six “activities of daily living,” on your own or you suffer from dementia or other cognitive impairment. Activities of daily living include things such as bathing, dressing, and eating. Be sure it is clear when coverage begins and how that determination is made.
- How long is the waiting period? A LTC insurance policy may have a “waiting period” during which you are required to cover your expenses out of pocket. The waiting period could be from zero days to 180 days, or even more. Make sure you know how long the waiting period is and that you have a plan to cover your expenses during that time period.
- What are the policy limits? Most policies have limits. The limit may be a specific period of time or a dollar amount. For example, a policy might only cover your LTC expenses for three years, or up to $500,000. Be sure you understand the policy limits.
Once you fully understand the terms of a long-term care insurance policy you can make an informed choice whether paying the (often high) premiums is worth it to you or not. Before you make a final decision, however, be sure to discuss your options with your Missouri elder care attorney first.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about St. Louis long-term care insurance, contact the experienced Missouri elder law attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.