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The Importance of Long-Term Care Insurance

| Sep 15, 2020 | Estate Planning |

The crisis generated by the COVID-19 pandemic has only served to highlight the vital importance of both long-term care insurance and caretakers.

Medical bills due to healthcare from the pandemic are expected to increase the medical debt in the country. One patient who survived COVID-19 received a bill for $40,000, and although it was sent in error, that kind of bill is not going to be the only one for many folks.

Survivors of the virus are expected to require increased levels of medical care after they leave the hospital, which may include treatments like inhalers, transfusions or dialysis, or organ transplants.

This increased medical toll is likely to create an increased need for caretakers, and an increased burden on the most common form of caretaking: unpaid family caregivers. As more survivors of the virus return home and face potential long-term medical issues, we are likely going to see the family caregiver roll expand a great deal. We are able to draft contracts to allow family members to be paid for caregiving. This can help with applications for financial support.

While nursing homes have been a hot spot for the pandemic, many Americans claim that they would much rather stay at home when receiving long-term care [1], and this preference makes sense. Your home is your home. It’s where you are most comfortable, it’s familiar, and it has the people and things you love. It’s understandable that many people would prefer to remain at home.

Unfortunately, that may not be an option. Paying for in-home medical care is often expensive. This is where long-term care insurance comes in. The insurance can help pay for an assisted living or nursing home facility or it may be able to cover costs for in-home medical care.

Long-term care insurance can also help family caregivers by compensating them for their time spent caregiving. This is especially important if your family member had to reduce their work hours at their job or give up said job entirely in order to provide care. On average, people need home care for 4.5 years [2]. That’s a long time to be without an income to pay bills. According to the AARP in 2015, the average lost income for a female caregiver amounted to $324,044.

Long-term care insurance can help bridge some of the gaps we often see in medical care, and help relieve some of the financial burden for the patient as well as the caregiver. In addition, the sooner you have it, the more likely you are to be able to use it. For some insurance providers, there comes a point when the patient may not qualify for the insurance and may not be able to sign up for it.

If you do have a family member providing caregiving services, you may want to draw up a caregiving contract, which I detailed in a previous blog. This will make explicitly clear what is covered by the caregiver and how they are to be compensated for their time and effort, even if they still have a job. It protects the patient as well as the caregiver if other family members cry foul about the treatment or level of care.

[1] Genworth Financial claims data, 2019.

[2] Genworth Financial claims data, 2019.