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7. Are there other types of coverage?
Other types of health-related coverage include long-term care
insurance, disability insurance, and supplemental insurance.
Long-term Care Insurance
The purpose of long-term care is to provide the help you need
to perform activities of daily living—such as bathing and dressing
yourself. Or, you may need supervision because of dementia
or another form of cognitive impairment. In addition to this
custodial care, some people also need skilled nursing services
due to serious illness.
You can receive long-term care in a
nursing home, assisted living facility, or in your own home.
The need for long-term care can arise at any time, regardless
of your age. Older people use the most long-term care, but
younger and middle-aged people sometimes need long-term care
as well. You may need long-term care because of a chronic illness
or disability that leaves you unable to care for yourself for
an extended period of time.
Long-term care can be very expensive. On average,
a year in a semi-private room in a nursing home costs about
$58,000 (estimated annual cost in 2005). In some parts of the
country, it may cost much more.
Home care is less expensive than
nursing home care, but it is still costly. Home care can include
part-time skilled nursing care, speech therapy, physical or
occupational therapy, home health aides, and homemakers. Having
the services of an aide in your home just three times a week-to
help with dressing, bathing, preparing meals, and similar household
chores-can easily cost $1,000 or more a month. If you add in
the cost of skilled help, such as physical therapy, the costs
can be much higher.
Long-term care—whether in a nursing home, assisted living
facility, or your own home—usually is not covered by health
insurance except in a very limited way. Medicare generally
doesn't cover long-term care.
Long-term care insurance can help protect you from the high
costs associated with this type of care. Most long-term care
policies pay a fixed dollar amount, which can vary quite a
bit-from as little as $40 a day to more than $200 a day. The
daily benefit for at-home care usually is about half of the
benefit for nursing home care.
In order to get the lowest rates,
you should apply sooner rather than later for long-term care
insurance. Your age and any medical conditions you may have
will affect your eligibility for coverage and how much it will
cost (the premium). Recent changes in Federal law may allow
you to take certain income tax deductions for some long-term
care expenses and insurance premiums. In addition, some States
may give a partial deduction or credit toward State income
taxes for these costs.
Traditionally, the annual rate of increase in the cost of
long-term care services has risen more quickly than it has
for other consumer services. This means the benefit you buy
today may not be enough to cover higher costs in the future.
You can choose a plan with an inflation adjustment feature
so that you can be protected against the rise in long-term
care costs over time until services are needed.
Long-term care insurance may be offered where you work, or
you may be eligible through a union, fraternal group, or other
organization to which you belong. In addition, many life insurance
companies offer long-term care insurance directly to the consumer.
Disability insurance replaces income you lose if you have
a long-term illness or injury and cannot work. This is an important
type of coverage for working-age people to consider.
Disability insurance is not usually considered a form of
health insurance, and it doesn't cover the costs associated
with rehabilitation following an injury or illness. Often,
these costs are covered under the major medical part of your
health insurance plan. Benefits paid under a disability plan
can be used for expenses at the discretion of the insured,
for example, rent, utilities, or groceries.
Some employers offer group disability insurance. Check with
your employer to find out if this coverage is available. Disability
insurance will be less expensive if your employer contributes
toward the cost. Many different kinds of individual policies
are also available. Contact your insurance company to find
out if it offers disability insurance coverage.
Different types of coverage are available to you that pay
benefits when specific types of events occur, such as hospitalization
or critical illness. This coverage usually will pay a cash
benefit that can be used to cover additional expenses that
you incur due to the event. This type of coverage may be available
from your employer or directly from an insurance company.