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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

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.

Supplemental Insurance

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.

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