We have health insurance to feel like we’re protected from significant medical costs. When we’re healthy, health insurance typically plays its role. If we get hurt, we go to the doctor, and we get treated with only a little bit out of pocket. If we get into a more significant accident, typically health insurance will pay for our hospital stay and recovery to varying degrees.
We think health insurance will cover our medical expenses. But many are surprised to learn that health insurance has limitations, particularly with regards to long term care. Health insurance does *NOT* pay for nursing homes, home healthcare aides, and other long term care workers and accommodations.
What Is Long-Term Care?
Long-term care encompasses a variety of services designed to meet the needs of individuals who require assistance with activities of daily living (ADLs) due to chronic illness, disability, or aging. These services can be provided in various settings, including at home, in assisted living facilities, or in nursing homes.
Health insurance policies, including those provided by employers and individual plans purchased through the marketplace, typically focus on covering medical care. This includes doctor visits, hospital stays, surgeries, and prescription medications. However, when it comes to long-term care, standard health insurance has significant limitations.
What Health Insurance Does Not Cover
Standard health insurance does not cover custodial care, which includes non-medical services that help with ADLs such as bathing, dressing, eating, and mobility. Custodial care is a key component of long-term care.
While health insurance may cover short-term home health services prescribed by a doctor, it does not cover long-term personal care or assistance provided at home over an extended period.
Health insurance does not cover the costs of residing in assisted living facilities or long-term nursing home care. These expenses must be paid out-of-pocket, through long-term care insurance, or via Medicaid for those who qualify.
Alternative Funding Options for Long-Term Care
Eventually, it is possible to get funding to help pay for long term care – typically through Medicaid. But not only does Medicaid have limitations, it also requires that you exhaust all of your finances first, meaning that you will not have anything else for retirement or to pass on to your heirs.
Given the gaps in health insurance coverage for long-term care, and the lack of government support until someone has lost the entirety of their livelihood, it is important to explore other funding options as you get older to ensure you have the necessary resources when needed. These include:
- Long-Term Care Insurance
Long-term care insurance is specifically designed to cover the costs associated with long-term care services. Policies vary, so it’s important to compare options and understand the benefits, coverage limits, and premiums. Long-term care insurance can help pay for in-home care, assisted living, and nursing home care.
Long term care insurance is recommended for everyone over the age of 50 to 55, and is seen as the single most effective way to make sure you have long term care needs covered should a situation arise where you need it.
- Personal Savings and Investments
Personal savings, investments, and retirement funds are common sources for covering long-term care expenses. Planning and saving in advance can help ensure financial security and access to necessary care, but of course, would require you to continue to use your savings until other programs kick in.
- Medicaid
Once you’ve exhausted your investments, you can explore Medicaid. Medicaid is a joint federal and state program that provides health coverage for low-income individuals, including long-term care services. Unlike standard health insurance, Medicaid covers custodial care and long-term nursing home stays. Eligibility requirements vary by state, and individuals must meet specific income and asset criteria to qualify.
- Other Government Programs
Veterans may qualify for long-term care benefits through the Department of Veterans Affairs (VA). Additionally, some state and local programs offer assistance with long-term care services for those who meet certain criteria.
Planning for Long-Term Care
Knowing the limitations of health insurance in covering long-term care, effective planning becomes even more important. Here are some steps you can take:
- Evaluate Your Needs – Consider your current health status, family medical history, and potential future care needs.
- Explore Insurance Options – Look into long-term care insurance policies and compare their benefits and costs. Keep in mind that LTC insurance is cheaper the earlier you get it and the healthier you are, so the sooner you contact us to connect you to a policy, the better.
- Save and Invest – Start saving early and consider long-term care costs in your retirement planning. Talk to a financial advisor to see how you can effectively cover long term care if needed.
- Research Government Programs – Determine if you qualify for Medicaid or other government programs that can help cover long-term care expenses.
Standard health insurance is essential for managing many healthcare needs but is not designed to cover the extensive costs of long-term care. Long term care insurance is typically the most effective way to prevent using up all your finances and experiencing a steep decline in your investments. For more information about LTC insurance, please contact Kaia Insurance Group to get connected to an agent.
