Over the past year nursing homes, assisted living facilities and other facilities that house the chronically ill, mostly the elderly*, have been ravaged by Covid. The numbers of infections and deaths are heartbreaking, especially since the vast majority of these people are isolated from their families. But why are all of these people in these facilities to begin with? Are there other options available and what do those options cost?
In general terms, most of the people who are in these types of facilities are deemed "chronically ill", which means that they will be ill for a long period of time and there is no cure. Some will receive some rehabilitation but getting them back to 100% is not possible. An example of this could be an older person who has broken a hip which will prevent them from walking again.
Medically speaking, long term care (LTC) services are for those who are unable to perform or need help with Activities of Daily Living (ADL's). These are:
- Bathing
- Transferring (going from the bed to a chair, for example)
- Dressing
- Using the toilet
- Eating
- Incontinence
Paying for these services can be expensive. Many people find out too late that Medicare will not cover the costs of assisted living facilities and will only pay for skilled nursing care for up to 100 days, and that is only if you are released from a hospital. In other words, the smart move is to begin looking for LTC insurance early on when you are healthy and insurable.
Most LTC policy's benefits will be triggered if someone is unable to perform two of the six ADL's. Another way to trigger the benefits is to be cognitively impaired, i.e. Alzheimer's or dementia.
There are other types of facilities as well, which mostly are non-medical. Think of an apartment but has meals and someone checks in on you. LTC policies generally don't cover these types of facilities.
Let's assume that you are reading this and are healthy enough to go through the underwriting process with an insurance carrier. What are your options? My suggestion is to call a few facilities in your area** to find out what they are charging their patients. Most are pretty good at giving you rates, but be aware that some will give you a monthly rate and others a daily rate, which is an industry norm.
With that valuable information at your disposal you can begin to look at ways of covering those costs. Needless to say, these services can be very expensive and it can easily take a few years to wipe out any assets one may have spent a lifetime working for.
Let me say right off the bat that there are a limited number of available "Medicaid beds" in each facility, but to be eligible for those one has to prove a level of indigence. In other words, you are limited in the assets you own and there is a "look back period", which at the time of this writing was 60 months. This is to avoid someone from transferring all of their assets to a family member so they can get free nursing care.
Going back to our options, if you are young enough you may want to look into a life insurance policy with LTC or "living benefits" as part of the policy or even a rider. This locks in the rate for your coverage and if you should pass away before you use it the life insurance will pay a death benefit to your loved ones.
The nice part about this option is that it pays you a percentage of the face amount of the policy once your doctor says that you can't perform 2 of the 6 ADL's or if you are cognitively impaired. Once the benefits are triggered they pay until they run out.
In the next post I will go over a couple more options. In the meantime, check us out on the web and please stay healthy!
*One of the myths of nursing facilities is that only the elderly are patients, when in fact nearly a third of the patients are under the age of 65.
**Costs vary dramatically depending on your geography.
Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!
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