A primer on LTC insurance.

• Author: Kaplan, Jay H.
• Position: Long-term care

When communicating to clients about long-term care (LTC), the information usually includes care for an individual who is physically or mentally disabled (i.e., unable to function or live without assistance from others). "LTC planning" refers to the process of preparing to meet the financial, medical, housing and personal needs of a person who can no longer function independently; typically, such care is not provided in a hospital. The plan must address the level of care needed and determine the location in which it can best be provided and how it will be financed.

Care Options

Care needed by an individual unable to function independently usually falls into one of the following categories:

* Acute care. Medical needs of the individual warrant hospital admission, so that appropriate care can be provided.

* Intermediate and skilled care. Care at this level is typically provided in a nursing home. If the individual is a private-pay patient, the doctor and family determine whether the facility is appropriate. If Medicaid payment is sought, the individual must meet the state program's "medically necessary" criterion.

* Residential care or assisted living. Generally, individuals who require this level of care do not meet the criteria for a nursing facility's skilled or intermediate care. Typically referred to as residential care facilities, these facilities are more moderately priced than nursing homes. Some states provide payment assistance to individuals who seek this type of care.

* Home care. Generally limited to individuals who can operate with some degree of independence and have a family support system that encourages them to remain at home, home care can be provided with some payment assistance from Medicare or Medicaid.

Payment Alternatives

Usually, LTC is paid from one of three sources: private pay; Medicaid, Medicare and Medigap; or LTC insurance. Some limited services may be initially covered by Medicare or the Veterans' Administration; however, these programs should not be considered long-term funding sources.

* Private pay. Currently, nursing homes charge approximately $3,000 to $6,000 per month for care. Maintaining a person at home with fulltime care is even more costly. Financing the entire bill can be prohibitively expensive if an individual relies solely on private pay.

* Medicaid, Medicare and Medigap. Usually, Medicare and Medigap policies cover portions of the first 100 days of nursing home care. These sources are extremely...