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Ohio Department of Aging Boomerang: It all comes back to you!

Boomerang: It all comes back to you!

My Future - June 2009

Do You Need Long-term Care Insurance?
To Find Out, Examine Your Health and Your Wealth

You buy insurance for a lot of reasons. You buy car insurance in case you have an accident or the car is stolen. You buy house insurance in case it is robbed or damaged. You even by life insurance to provide for your family in the event you no longer can. But, should you buy long-term care insurance to ensure you get the care you need in the event that you are no longer able of taking care of yourself?

Long-term care focuses on helping you live as independently as possible and includes help with day-to-day living, such as help bathing, cooking, cleaning, transportation to and from medical appointments, wound care, medication administration and more. It can be provided in your home, in an assisted living facility, in a nursing home or in other settings.

The Ohio Department of Insurance estimates the average cost of long-term care in Ohio at $4,200 per month. Medicare, the federal insurance program for adults age 65 and older, does not pay for most long-term care. This leaves most people to pay for the care they need out of their own pockets. The state's Medicaid program will pay for most types of long-term care, but only after you have exhausted all of your personal assets to pay for it.

A long-term care insurance policy can help you cover these costs before you need the care, but only if it is well-suited for your situation. To help you decide whether a policy would be a good idea for you, the Department of Insurance recommends you evaluate both your health and your wealth.

How likely is it that you will require long-term care at some point in your future? Are you pretty healthy now? Do you have mostly healthy habits? If so, you may be less likely to need a home health aide or nursing home services. However, if you have or had older relatives who had to access long-term care due to chronic or hereditary conditions, it may be more likely.

If you believe you have enough money to pay for the long-term care you are likely to need, you may not need insurance. If you choose to purchase a policy, you'll get peace of mind, but it comes with a monthly premium. Can you afford that premium? Over time, will the insurance cost you more than paying for the care outright?

While generally cheaper than out-of-pocket expenses for long-term care, insurance premiums can be quite high. The cost can depend on your age when you buy the policy, as well as the daily benefit level, deductible, benefit period and any optional features you select. Long-term care insurance is term insurance, meaning it only covers you while you are paying premiums. Some people purchase a policy but find out too late that they can't afford it over time.

Another reason people consider long-term care insurance is to assure that they are able to leave some resources to their families after they die. It is not uncommon for an individual to completely deplete both his savings and his estate paying for long-term care. After that point, Medicaid takes over, but the individual is left with little to pass on. A relatively new program in Ohio allows you to buy long-term care insurance, receive benefits from the policy and protect a matching amount of assets if you continue to need care and apply for Medicaid.

These new policies, called long-term care partnership policies, work just like any other insurance contract. You pay premiums, then receive benefits when you need them. Once you've exceeded the limit of coverage purchased, you can apply for Medicaid, but for every dollar you used in benefits, you'll be able to protect a dollar of assets from Medicaid. Purchasing a long-term care partnership policy does not guarantee you'll be eligible for Medicaid, but it does offer the assurance that you'll have something to live on or pass along if you do qualify.

For more information on long-term care partnership policies, visit www.ltc4me.ohio.gov. To learn more about long-term care insurance in general, call the Ohio Department of Insurance at 1-800-686-1578 or visit www.insurance.ohio.gov.