Long-Term Care Insurance for Business Owners (Part I)

In the past half a century, there have been more technological breakthroughs than ever in the medical field. With all these medical advances, people are living far longer than at any time in modern history. However, with longer life spans comes the increased likelihood that you may need some form of ongoing care as you age. The problem is that in most cases, Medicare will only pick up a portion of the financial burden for senior care, leaving the rest for you and your family to pay.

Long-term care insurance was created to address the needs of those that require assistance in day-to-day living. This may include aging seniors and also those under 65 who may develop a debilitating condition.

What does long-term care insurance cover? In general, long-term care insurance is there to provide supplemental services that accompany a medical condition. The medical treatment itself is usually covered (at least partially) by Medicare or Medicaid. The long term care policy is there to help with the cost of nursing care and assistance with everyday tasks, such as:

• Cooking/eating
• Bathing/dressing
• Housekeeping
• Pet care
• Grocery shopping
• Transferring (from chair to bed, etc.)
• Skilled nursing care
• Occupational/speech/physical therapy or rehab

Qualified personal care may come in many forms, such as:

• In home care
• Respite care
• Adult day care centers
• Assisted living facilities
• Nursing homes
• Alzheimer’s and dementia care facilities
• Hospice care

Most long-term care policies have an “elimination period” of 30, 60, or 90 days before you are allowed to receive your benefits. The elimination period is similar to a deductible on a standard auto or homeowner policy; the policyholder must pay the personal care costs out of pocket for the specified elimination period. This period is determined at the time you take out the policy and as with any other type of insurance, the longer the length of time you agree to pay out of pocket, the lower your insurance premiums will be.

In Part II of this series, we will discuss asset protection, financial burdens, and the importance of planning early.