What is Long Term Care?

» Posted by on Aug 14, 2011 in Long Term Care Insurance | Comments Off on What is Long Term Care?


Long Term Care is a term that encompasses all of the services that a person needs when he or she has lost the capacity for some of the Activities of Daily Living (known as ADLs in by the community of care givers, care administrators and Insurance Companies).

The list of these activities is generally recognized as the following:

  • Bathing
  • Dressing
  • Toileting
  • Transferring i.e. to or from a bed, a chair or a wheel chair
  • Continence
  • Eating

A personal situation that often results in the need for Long Term Care may or may not include the loss of the Activities of Daily Living mentioned above, but comes from the cognitive impairment that can come from Dementia or Alzheimer’s disease

Loss of some of the Activities of Daily Living is seen as a loss if independence and Long Term Care is most often defined as the care needed to minimize the effects of the loss of independence.

Most people who need Long Term Care would rather receive such care in their own home, as opposed to being confined to a facility such as a nursing home or assisted living facility.

Society in recent decades has caused families to become scattered geographically and very busy (in most cases today, there is not a spouse who remains at home during the daytime). Delivering Long Term Care to aging or sickly family members who may have lost some of their Activities of Daily Living has become a daunting and often troubling challenge.Many families have purposed to provide for the needs of their loved one, only to become overwhelmed with the demands as time goes by. The struggle has sometimes resulted in feelings of guilt, resentment between family members and loss of the comfort of family closeness on which most of us rely.

Often there was not a good alternative to the family based model of care because health insurance and Medicare does very little to pay for the services needed to deliver Long Term Care.

Sometimes the only alternative to the care-at-home-by-family idea that didn’t work out, was to rely on the government funded Medicaid Nursing Home approach. This government funded option came with its own problems, such as

  • The environment in the Nursing Home may not measure up to the family’s hopes.
  • In order for the person in need of care to receive the government funded care, he or she had to be ‘impoverished’, owning almost no assets. Once becoming impoverished, the nursing home residency would very likely become permanent, due to the lack of financial ability to live anywhere else.
  • Often the Medicaid Certified nursing home would be in a less than ideal location, making visits by family and friends difficult.
  • Since most people who have lost Activities of Daily Living are not in need of the intense level of care provided in a nursing home, often the nursing home was not a suitable environment for the person in need of care. A relatively lively person with one or two physical challenges would be confined in a facility with people who were largely bedridden.

Along came the Insurance Companies

Two or three decades ago, Long Term Care Insurance began to address the need for Long Term Care. Insurance companies began to offer plans that would pay Nursing Home Expenses to address some of the problems that were encountered when the person in need of care was confined to a nursing home.

There were two major challenges that early Long Term Care insurers encountered:

  • It would be difficult to determine how to price the plans and how much reserve money the insurer would need on hand to cover claims. Insurance company actuaries are very talented, but experience is required to make good projections. Some of the companies needed to request large rate increases, which were not always granted by the individual states, and some decided that they could not continue to offer Long Term Care insurance plans.
  • The early plans didn’t compensate for the expenses incurred when the person needing care was not confined to a Nursing Home but would receive licensed or unlicensed, skilled or unskilled care at home (at home care is the choice of most Long Term Care recipients), or perhaps in an Assisted Living Facility, which generally costs half of what a Nursing Home costs and is often (based on the situation of the person needing care) more suitable than the Nursing Home.

The Evolution of Long Term Care Insurance

Long Term Care Insurance has come a long way in the last few years.

There are innovations in Long Term Care Insurance that are designed to pay for the needs for Long Term Care when the services are provided at home by skilled or unskilled personnel (often friends and family members), an assisted living facility or an Adult Day Care service (there are more people receiving Adult Day Care services than there are children receiving child day care).

There are insurance companies who have learned how to offer good Long Term Care insurance plans that provide the coverage needed by their members while still making a profit (necessary to continue to offer coverage).

Partnership Plans

Many states have developed Long Term Care Partnerships. Such Partnership Plans in the event that a care recipient receives Long Term Care under the state’s Medicaid Program, will allow the care recipient to retain an amount of personal assets equal to the amount previously paid in claims by the recipient’s Long Term Care Policy. This of course gives potential Long Term Care recipients an opportunity to protect their personal assets while still having the safety net of the state Medicaid program. The partnership programs, by giving potential care recipients incentive to make arrangements to pay for the possible need of Long Term Care, reduce the financial exposure of the participating state for the costs of Long Term Care.

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