Long term care can mean many different things but any chronic or disabling condition that requires nursing care or constant supervision can bring on the need for long term care services. Long term care means not only care in a nursing home, it can also mean nursing care in your own home and help with the activities of daily living, such as dressing, eating, bathing and taking medicine.

There are many different services that would fall under the definition of long term care. These services include institutional care, i.e., nursing facilities, or non-institutional care such as home health care, personal care, adult day care, long term home health care, respite care and hospice care.

There are other long term care services that provide people with an option other than nursing home care. These services are defined below:

Home health care consists of services received in your home, and can include skilled nursing care, speech, physical or occupational therapy or home health aide services.

Home care (personal care) consists of assistance with personal hygiene, dressing or feeding, nutritional or support functions and health-related tasks.

Adult day care is for persons living at home, and provides supervision for elderly persons during the day when family members are not at home. It is a method of delivering a variety and range of services including social and recreational, and in some cases, health services, in a group setting.

Assisted living facilities provide ongoing care and related services to support those needs resulting from a person's inability to perform activities of daily living or a cognitive impairment.

An alternate level of care in a hospital is care received as a hospital inpatient when there is no medical necessity for being in the hospital and is for those persons waiting to be placed in a nursing home or while arrangements are being made for home care.

Respite care includes services that can provide family members a rest or vacation from their caregiving responsibilities. It can be provided in a variety of settings including an individual's home or a nursing home.

Hospice care is a program of care and treatment, either in a hospice care facility or in the home, for persons who are terminally ill and have a life expectancy of six months or less.

Do I need insurance coverage for long term care services?

Long term care is very expensive, and most people cannot afford to privately pay for long term care services for very long. Home health care is also expensive. The chance of needing some type of long term care services is fairly high. It is estimated that over 40% of all persons who were 65 years old in 1990 will enter a nursing home during their lifetimes.

Isn't long term care covered by Medicare or other health insurance?

Medicare does NOT pay for most long term care services. Individuals should not rely on Medicare to meet their long term care service needs. Medicare does not pay for custodial care when that is the only kind of care needed. Even skilled nursing facility care is covered by Medicare only on a very limited basis.

In order to obtain Medicare coverage of a skilled nursing facility stay, the following five conditions must be met:

• Your condition must require daily skilled care which, as a practical matter, can only be provided in a skilled nursing facility on an inpatient basis.
• You must have been in a hospital at least three days in a row (not counting the day of discharge) before you are admitted to a certified skilled nursing facility.
• You must be admitted to the facility within a short time (generally within 30 days) after you leave the hospital.
• You must have received treatment in a hospital for the condition for which you are receiving skilled nursing care.
• You must receive certification from a medical professional that you need skilled nursing care or skilled rehabilitation services on a daily basis.

If the skilled nursing facility stay continuously meets all of the above conditions, Medicare will provide benefits for up to 100 days of skilled care in a skilled nursing facility during a benefit period. In 2008, for the first twenty days of care, all covered services are fully paid by Medicare. For the next 80 days of care, Medicare requires a copayment (the amount you must pay) of up to $128 per day.

If you need skilled health care in your home for the treatment of an illness or injury, Medicare can pay for home health services furnished by a home health agency. You do not need a prior hospital stay to qualify for home health care. Medicare pays for home health visits only if all four of the following conditions are met:

• The care you need includes intermittent skilled nursing care, physical therapy, or speech language pathology.
• You are confined to your home.
• You are under the care of a physician who determines you need home health care and sets up a plan for you to receive care at home.
• The home health agency providing services participates in Medicare.

Once all four of these conditions are met, Medicare will pay for covered services as long as they are medically reasonable and necessary. Coverage is provided for the services of skilled nurses, home health aides, medical social workers and different kinds of therapists. The services may be provided either on a part-time or intermittent basis, not full-time.

Medicare pays the full cost of medically necessary home health visits by a Medicare-approved home health agency. You do not have to pay a deductible or coinsurance for services, however, if you need durable medical equipment, you are responsible for a 20% coinsurance payment for the equipment.

Medicare will NOT pay for full-time nursing care at home, drugs, meals delivered to your home, and homemaker services that are primarily to assist you in meeting personal care or housekeeping needs.

More information on Medicare and changes to the deductibles and copayments under Medicare is available on the web site of the Centers for Medicare and Medicaid Services at http://cms.hhs.gov.

Medicare supplement insurance is designed to fill in some of the major gaps in Medicare coverage, but IT DOES NOT COVER MOST LONG TERM CARE SERVICES.

Other private health insurance that you might already have covers mainly acute conditions and probably does NOT cover custodial care.

Medicaid, a governmental program for low-income individuals and families, is currently the major source of funding for long term care services. In order to qualify for Medicaid coverage, persons must meet certain income and asset tests. Because of the high cost of nursing home care, more than half of those who enter nursing homes privately paying for their care reach this level in less than a year. In many states, if only one spouse needs nursing home care, the married couple is allowed to keep a home, a car and assets up to $104,440. A single person who requires such care may only keep assets of $4,350

How else can I pay for long term care services?

There are other options that you should be aware of that may help you pay for long term care services:

Savings and Investments: A savings or investment plan may help pay for long term care services. A retirement plan such as an IRA or 401K plan may also be available to you.

Life Insurance: A life insurance policy may offer the opportunity for a loan or withdrawal of the cash value. In addition, a person who is terminally ill may arrange for an accelerated cash lump sum death benefit from his life insurance company or for a cash lump sum (called a viatical settlement) from an outside firm. (Note: not all life insurance companies offer an accelerated death benefit option). These cash lump sum benefits are paid in lieu of the policy’s death benefit.

Equity in Your Home: If you have built up equity in your home, you could use the profit from the sale of your home to fund long term care costs and move to less expensive accommodations. Another option is a "reverse mortgage," which is a loan based on the amount of equity you have built up in your home.

Insurance Covering Long Term Care Services

It is important to realize that insurance policies covering long term care services are a relatively new form of insurance. The services covered under these policies can be significantly different among policies.

Therefore, it is very important to read the policies carefully and compare the benefits to determine which policy will best meet your own personal needs.

Indemnity policies are those that pay a specific dollar amount for each day you spend in a nursing facility or for each home health or home care visit. Some of these policies pay the daily benefit amount regardless of the charges, others will pay covered charges, or a percentage of covered charges up to the daily benefit amount.

Over time, as nursing home and home care charges increase, the daily dollar amounts which are payable under these policies do not increase, however, insurers selling these policies are required at the time of sale to also offer an "inflation protection" benefit. Some insurers also offer an option to increase the daily benefit amounts and maximum policy benefit at a future time. Under this option, you have the ability to increase the amounts every specified number of years. Unlike an inflation protection benefit purchased at the same time as the policy, if you opt to increase the daily benefit amounts and maximum policy benefit under this option, your premiums will increase based on your attained age at the time you opt to increase the benefits.

Classifications Of Insurance Policies Covering Long Term Care Services

The Department of Insurance recognizes four different classifications for these policies:

• Long Term Care Insurance
• Nursing Home and Home Care Insurance
• Nursing Home Insurance Only
• Home Care Insurance Only

Long Term Care Insurance policies provide the broadest coverage of long term care services.

Tax Savings

In 1996 the Federal government amended the Internal Revenue Code to allow favorable tax treatment of long term care policies which qualify under the law. Generally, benefits you receive from tax-qualified policies will not be considered as taxable income under either federal or state law. The premiums charged for tax-qualified policies are treated as medical expenses for purposes of itemized deductions up to certain dollar limits that are indexed annually.

Activities of Daily Living (ADLs): Everyday actions performed by individuals such as dressing, eating, bathing, toileting, continence and transferring. Most insurance policies covering long term care services base your qualification for benefits on your inability to perform a certain number of ADLs.

Adult Day Care: Group supervision for elderly persons, including social and recreational services and in some cases health services, in a community facility.

Alternate Level of Care Benefits: Care in a hospital inpatient setting for those persons waiting to be placed in a nursing home or while arrangements are being made for home care.

Assisted Living Facility: A residential facility providing ongoing care and related services for persons needing assistance in the activities of daily living.

Copayment or Coinsurance: The amount you must pay for each medical service, outpatient hospital service or hospital stay.

Custodial Care: Non-medical care that meets your personal needs. For example, custodial care includes help eating, bathing, toileting, taking medication or walking.

Cognitive Impairment: Deterioration in intellectual activity such as thinking, reasoning or remembering.

Daily Benefit Amount: The amount your insurance policy will cover for each day of services provided. Some policies pay a flat daily benefit amount, while others will pay reasonable and customary charges up to the daily benefit amount.

Deductible: The amount you must pay for health care before Medicare or private medical insurance begins to pay.

Dementia: Impairment of intellectual faculties due to a disorder of the brain.

Elimination or Waiting Period: The elimination or waiting period is the number of days you must receive long term care services before benefits will be paid under the policy. During the elimination or waiting period you will have to privately pay for the care you receive. A new elimination or waiting period may be imposed for each period of care. Shorter periods increase the cost of coverage.

Free Look Period: The time period after receipt of the policy during which a policyholder can cancel and get a full refund.

Functional Impairment: The need for assistance to carry out a specific number of activities of daily living.

Guaranteed Renewable: Guaranteed renewable means that you have the right to continue the policy as long as the premiums are paid on a timely basis. An insurer cannot terminate the policy if your health declines. The insurer also cannot make any change in any provision of the policy while the insurance is in force without your agreement.

Home Care (personal care): Assistance with personal hygiene, dressing or feeding, nutritional or support functions and health-related tasks.

Home Health Care: Health services received in your home, including skilled nursing care, speech, physical or occupational therapy or home health aide services.

Hospice Care: A program of care and treatment, either in a hospice facility or in the home, for persons who are terminally ill and have a life expectancy of six months or less.

Inflation Protection Benefit: Increases the daily benefit amount and policy maximums over time to help keep pace with inflation and increased expenses.

Maximum Policy Benefit: The period of time or dollar amount limit for which long term care benefits will be paid under the policy.

Medicaid: A governmental program for low-income individuals and families.

Medicare: A federal program providing hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons.

Medicare Supplement Insurance: Private insurance designed to fill in some of the major gaps in Medicare coverage.

Nonforfeiture Benefit: A benefit designed to ensure that if an insurance policy is lapsed after a specific number of years, some of the benefits from the policy will be retained.

Partnership for Long Term Care: A public-private partnership which combines private long term care insurance with Medicaid Extended Coverage to provide New Yorkers with a lifetime of long term care benefits.

Period of Care: A specified number of days of care either in a nursing home or while receiving home care services without a break in the services for a specified number of days.

Pre-existing Condition: A medical condition for which medical advice was given or treatment was recommended by, or received from, a licensed health care provider within six months before the effective date of coverage.

Respite Care: Services to provide family members a rest or vacation from caregiving responsibilities.

Skilled Nursing Care: A level of care that must be given or supervised by registered nurses.

Viatical Settlement: A cash lump sum paid in lieu of a life insurance policy’s death benefits.

Waiting Period: The number of days you must be in a nursing facility or the number of days of home health care you must receive before long term care benefits will be paid under the policy. During the waiting period, you must privately pay for the nursing facility stay or home health care services.

Waiver of Premium: After a policyholder has received benefits for the specific number of days stated in the policy, no further premiums will be due until they leave the nursing home.