Definitions
What is it?
Long-term care insurance is insurance that covers the cost of chronic, long-term illness instead of acute, short-term illness. It covers the cost of home health aides, assisted living facilities and other services that help the chronically ill get through the day.
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Who needs it?
Let's be realistic. Any of us can be in a coma tomorrow. All it takes is a car accident, a weekend sports injury or a stroke. You know, a third of the people who suffer a stroke each year are under 65.
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What about health insurance and Medicare?
Once you're in what's called a "chronic maintenance state," you can forget about health insurance and Medicare. They pay for short-term, skilled care -- and that's not the kind of care a chronically ill person needs. Whether you're 85 with Alzheimer's or 22 and paralyzed from a car crash, you need help with everyday living. Insurance and Medicare don't pay for that.
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So that leaves Medicaid?
Yes, but everyone must understand that Medicaid is a means-tested program. It is for those who do not have the funds to pay for their own care. And that means it is administered like most public programs. A person on Medicaid will not have a private room and most likely will not get any long-term help with home care. They will most likely end up in a nursing home -- probably not the nursing home they would choose if they had a choice.
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What about disability insurance?
Disability insurance is intended to replace part of your salary so that you can still pay the mortgage, your children's tuition and so forth. It doesn't provide the extra $5,000 a month for home health care or an assisted living facility. Disability insurance may be something we need during our child-rearing years but it doesn't replace long-term care insurance.
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Next: Assessing the Need
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