A big misnomer in the U.S. is that Medicare covers long-term care expenses. This is only partially correct. Medicare generally only covers short term recovery benefits for "skilled" care in a nursing home following a hospitalization.
Long Term Care (LTC) Insurance provides for handling the financial burden of either nursing home care or at-home care. Policies typically pay a fixed daily benefit which is chosen at the time of inception of the policy. LTC coverage is important if you do not wish to burden your family with the expense for your care or if you wish to preserve your estate.
If you have assets (home equity, savings, and investments) greater than $50,000 in value you should be considering long term care insurance. If you consider that the average cost for a year of nursing home care is $50,000 nationally, the need for protecting your assets is great.
To show support to the need for long term care insurance the federal government passed legislation in 1997 that provides tax incentives to individuals and corporations who purchase long term care coverage.
What does this mean? It means that the federal government is telling us loud and clear to take care of our own long term care needs with private insurance.
Key Benefits to LTC Coverage include:
- LTC Insurance can be used for at-home care as well as institutional care
- LTC Insurance typically pays a fixed daily benefit, as long as you need assistance with at least three or more daily living activities or if you suffer from a cognitive impairment or disorder
- As with other types of insurance, LTC Insurance policies can include riders such as guaranteed renewable and yearly benefit increases
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