Long-Term Care Insurance

Today, Americans are living longer than ever before, and this trend is expected to continue: over the next 50 years, the age-85-and-older population is expected to be the fastest growing segment of society. Unfortunately, as we get older, the chances of needing long-term care increase.

Long-term care refers to helping people with chronic conditions perform the essential activities of daily life, such as bathing, dressing, and eating; it can be quite costly. These are the main ways in which people pay for this type of care:

  • Medicare and Medigap. Medicare and Medigap insurance do not cover long-term care. Medicare may pay for a limited amount of skilled care in a nursing home or at the recipient's home, generally after release from a hospital.
  • Medicaid. Medicaid is the major source of funds for long-term care, according to the U.S. Department of Health and Human Services (2002). However, you may have to exhaust almost all of your personal assets before becoming eligible for Medicaid benefits.
  • Personal Assets. Many people rely on their personal funds before becoming eligible for Medicaid. However, today's high health care costs may make your hard-earned savings disappear quickly.
  • Long-Term Care Insurance. If purchased in advance, private long-term care insurance can help protect your assets from the costs of long-term care, avoid or defer dependence on Medicaid, help you maintain your independence, and provide you with more options for care.

Without proper planning, the cost of long-term care can wipe out your savings and threaten your financial independence in retirement. Take measures now to preserve your assets and maintain control of your finances.

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