Long Term Care Facilities: In-Home or Community-Based?
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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
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UPDATED: Mar 20, 2024
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When considering long term care insurance, ask yourself where you want to receive your care: at home, in the community, or in a facility?
Planning for your long term care needs is an important consideration when thinking about your future. To complicate matters more, the types of coverage can vary greatly even between policies with the same carrier.
What is the best for you? In general, we recommend GoldenCare.
Like many reputable companies, GoldenCare is a national agency that can use its size and reputation to find the best rates and coverage for your needs.
What Is Long Term Care?
Long term care is a service provided on a long term basis to assist you with your activities of daily living (ADLs) that you otherwise would perform on your own without assistance. These services are not typically covered by your private health insurance policy, Medicaid, or Medicare.
The daily living activities are:
- Bathing
- Eating
- Toileting
- Continence
- Dressing
- Transferring (getting in and out of bed or chair)
To qualify for long term care insurance coverage, regardless of your age, you must have experienced an event that resulted in a severe physical injury, or you have a physical disability, or cognitive impairment, which requires assistance with at least two ADLs.
Long term care can be provided in a variety of settings, including your home or a facility such as a nursing home or an assisted living residence. Your physician, a registered nurse, or a care coordinator will determine a plan of care that can include any or all of these settings.
When shopping for long term care policies, keep in mind that quality of care will vary from one setting or caregiver to another. Home care most likely will be done by a family member or friend whereas in a facility, registered nurses will administer care.
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Why Consider Long Term Care?
According to the National Association of Insurance Commissioners (NAIC),
- Life expectancy after the age of 65 is now 18.6 years
- There is a 70% chance that some form of long term care will be required at least one time in your lifetime
- The current average stay in a nursing home is one year
- The number of people aged 85 and older will almost triple from over 6 million to over 18 million by 2055
We recommend that you answer the following questions before choosing your policy:
- Where do I want to receive my long term care?
- What type of services do I want access to?
- How will I pay for it?
Types of Long Term Care
When shopping for long term care, make sure you check to see what services are eligible as well as what types of facility are covered under each policy. You do not want to end up in a non-qualifying facility where your insurance company can refuse to cover what would otherwise be eligible services.
Types of care vary greatly between carriers, policies and by state. The types of locations that may be eligible under a policy include:
- In-home care
- State-licensed facilities (some or all)
- Rest homes, personal care homes, homes for the aged
- Day care facilities (community-based)
Some policies may qualify a facility only if it has a certain number of registered patients or only qualifies a subset of services per each type of facility. If you move to a new state, make sure to check what types of facilities are covered in that state under your current policy. Additionally, check to see if your policy requires the facility to have any other licenses or certifications from a government agency.
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Exclusions and Limitations
According to NAIC.org, typically, most long term care insurance policies don’t pay benefits for:
- A mental or nervous disorder or disease, other than dementia or Alzheimer’s disease
- Alcohol or drug addiction
- Illness or injury caused by an act of war
- Treatment in a government facility or that the government has already paid for
- Attempted suicide or intentionally self-inflicted injuries
Types of Long Term Care
In-Home Care
In-home care means just that. You receive your long term care services in your home from a family member or a friend or from a professional caretaker.
Benefits include:
- Getting care in your own home
- One-on-one care
- Increased life expectancy
- Reduced stress
- Usually the least expensive alternative
Community-Based Services
These are long term care services that can include adult daycare, senior center activities, transportation, meals, and more. These services can complement in-home care and can provide the caretakers with a much-needed break. Daycare or senior centers provide services in protected settings and are especially beneficial for someone with dementia or Alzheimer’s disease.
Benefits include:
- Blended care with in-home services
- Caretaker relief from running errands, doing tasks, and constant care
- Social network outside of the home
- Usually less expensive than facility care
Assisted Living Services
The level of care provided in an assisted living facility is normally not as high as a nursing homes. Assisted living residences are often an alternative when you don’t need 24/7 supervision, but you may need more care than what can be provided at home.
Benefits include:
- 24/7 care if needed
- A higher level of independence
- Built-in social networks
- Usually less expensive than nursing homes
Nursing Homes
These facilities offer much more extensive care than in-home or assisted living care can provide. Nursing homes have meals, activities, help with daily living, and 24/7 supervision. Some also provide skilled nursing care and rehabilitation services.
Benefits include:
- 24/7 supervision
- Increased level of care
- Built-in social network
- Relief to in-home caretakers
Continuing Care Retirement Communities (CCRCs)
These type of facilities may be covered for long term care services.
The care at these facilities is usually provided during one or more of the three stages of care:
- independent living
- assisted living
- hospice
Some policies may cover long term care at a CCRC but make sure to check each policy. CCRCs tend to be very expensive with a large upfront down payment required.
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What Kind of Services Do I Need?
Long term care covers a large list of care services, including help with ADLs as well as health care needs.
I know it may be hard to think about what type of service you or a loved one may need in the future, but doing this exercise can help in receiving coverage for the activities or health care needs you desire.
Help with daily activities can include:
- Eating
- Bathing
- Dressing
- Grooming
- Bathroom
- Walking
- Meals
- Shopping
- Home Maintenance
- Medication Reminders
Health care needs can include:
- Physical Therapy
- Speech Therapy
- Occupational Therapy
- Rehabilitation
- Alzheimer’s Disease Care
- Health Monitoring
- Skilled Nursing Care
Depending on the setting, different services are available. Again, you will want to check each policy while shopping for long term care insurance.
The Cost of Services
Long term care can be expensive. It depends on the amount and type of care you need and in what setting you receive care. Additionally, costs will vary depending upon a multitude of variables including where you reside (state, urban, rural), age, gender, and health history to name a few.
According to the Genworth 2017 Cost of Care Survey, the following are median annual rates for long term care in the United States:
- $47,934: In-Home (Homemaker)
- $49,192: In-Home (Home health aide)
- $18,200: Community (Adult day care)
- $45,000: Assisted Living
- $85,775: Nursing Home (Semi-private room)
- $97,455: Nursing Home (Private Room)
How Will I Pay for Coverage?
This is the biggest challenge for most people when it comes to considering long term care insurance. Where will the money come from for this type of care? As you can see, in-home care is the least expensive type of care; however, it is not as robust as the care in a facility.
Personal Funds
Many people or their family members use their own money to pay for part or all of their long term care costs. You may use funds from your savings account or other available investments. This is an option if you are good at saving money (planning ahead) or if you already have accumulated a significant financial portfolio. Many people use their own funds to cover long term care costs. Depending on the type of care, the costs vary greatly.
Medicare and Medicaid
You will want to talk to your insurance agent to find out more about Medicare or Medicaid coverage specifically for you in your area.
Long Term Care Insurance
There are two primary types of long term care insurance: traditional and hybrid.
Traditional long term care insurance policies are similar to auto or medical insurance policies in that you “pay-as-you-go” through monthly premium payments. Premiums are much more affordable with traditional long-term care insurance policies.
Hybrid, combined, or “linked” long term care policies typically feature a life insurance component with a long term care rider. Generally, hybrid policies have a single and significant upfront premium.
You can decide how much and type of coverage you want. But as you can see there are many variables to look at when shopping for long term care.
We hope this blog post has helped!