Krissie Berni
Protecting and Securing Your Financial Future
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Long Term Care and Disability
Long Term Care
Long Term Care goes beyond medical and nursing care to include all the assistance you would need if you have an illness or disability that leaves you unable to care for yourself for an extended period of time.
Why Do I Need Long Term Care Insurance?
Long Term Care insurance is something you should consider if you want to:
Individual Plans If you can afford it, you may consider opting out of your employer plan and purchasing a more comprehensive individual policy on your own. Why spend the extra money? An individual policy stays with you when you switch jobs and you can take legal action if the insurance company denies or delays benefits. (With a group plan you'll have to go through a lengthy arbitration process.) And unlike group policies, the amount that you receive is also not offset by any other benefits, such as Social Security, that you may receive. Long-term disability insurance kicks in once your short-term disability benefits run out. Unfortunately, there are no state laws that require employers to provide long-term disability, but it's estimated that half of all midsized to large firms do provide at least some insurance. If you do decide to buy an individual long-term disability plan or to supplement your employer-based insurance, be sure to find out how much short-term disability coverage you have. There's no reason to pay a premium for a long-term disability policy with a short elimination period of, say, 60 days when you have short-term coverage for six months.
Who Pays For Long Term Care and How Much Does It Cost?
YOU do. Unless you have a Long Term Care insurance policy you or your family are taking all the financial risk if something happens to you. Most people think that Medicare or Medicaid will cover their Long Term Care expenses, but this is not true. While Medicare will cover some expenses for illness or disability, it is only for a short period of time. In addition, Medicaid will only cover expenses if you qualify and spend down all of your assets.
Here are some average costs for typical Long Term Care expenses:
Assisted Living Facility (One-Bedroom unit) $32,294/year
Nursing Home $70,912/year
Home Health Care (Home Health Aide) $19.00/hour
To find out how much long term care services cost in your area click here.
Disability Insurance
Disability insurance is necessary to protect your family from the financial burden of lost income if you are seriously injured or sick. These policies provide different types of benefits depending on your needs, occupation and income.
Group Plans
Unless you're self employed, the first thing you should do is figure out if your employer provides long-term disability insurance. The typical group plan covers up to 60% of one's income. (This is offset by any other benefits you may receive from social security or worker's comp.) But the amount may actually be far less than that. That's because most group plans have a benefit cap of, say, $5,000 a month or $60,000 a year, says Todd Katz, vice resident of group disability for MetLife. Another surprise for many is that bonuses don't usually make it into the equation. A group plan will only insure your regular salary.
If you are self-employed or not covered by your employer, it clearly makes sense to consider purchasing an individual plan. But even if you are covered at work you may want to consider supplementing what you've got: After all, you probably can't afford to live on just 60% of your salary. An individual plan will allow you to insure another 10% to 20% of your income.
Short Term Vs. Long Term Disability
What's the difference? Short-term disability insurance — also known as sick leave — kicks in as soon as you're unable to work due to an illness, injury or the birth of a child. Most employers provide some type of coverage, ranging from just a few days to as much as one year. In some cases, the number of weeks you're eligible for this benefit is based upon how many years you worked at a company. The longer your service, the more paid sick leave you'll get.
