Five Common Long-Term Care Myths

dreamstime_m_18050207.jpgOne of the purposes for long-term care (LTC) considerations and insurance is to provide a way for families to avoid worrying about the financial burdens these occurrences impose, but focus on the emotional and personal ramifications of everybody affected by these situations.

Despite the numerous advantages that come with long-term care, many common misconceptions of how and when it can be used have formed. This could result in people having a completely distorted outlook on long-term care, potentially preventing someone from utilizing this coverage when they could greatly benefit from it and vice versa.

Below are five common misconceptions of long-term care, along with the truths behind each particular claim that reveal both the positive and negative traits of utilizing this coverage.

Claim #1: "All long-term care services and expenses are covered by LTC insurance and Medicare."

The Truth: While LTC insurance can cover up to 60-70 percent of services, Medicare pays for few of these expenses, and has strict limitations.[1] Medicare doesn’t cover services like assisted living, and accounts for limited coverage of home health accommodations—assuming you even meet all of the strict qualifications to receive Medicare.[2]

Medicare doesn’t even put much of a dent in expenses at institutions like nursing homes, only accounting for the first 100 days, out of which 20 are fully covered.[3] The remaining costs come out from the patient’s other assets or income streams like social security or retirement accounts.

Claim #2: "Only wealthy individuals can afford long-term care."

The Truth: Prices for long-term care can range anywhere from $20 an hour to over $90,000 a year, depending on the type of care. This can be anything from homemaker services to a private room in a nursing home.[4] Fortunately, resources like LTC insurance can mitigate long-term care costs to much more affordable levels.

Even if you can self-insure long-term care by liquidating assets, it might make more sense to purchase LTC insurance instead, so you can protect and prolong your funds. If you set this money aside to grow in a hybrid life or LTC insurance policy, those funds can grow tax-deferred to cover future service costs, or provide a death benefit to heirs if they’re never used.

Claim #3: "There aren’t any distinctions among long-term care insurance."

The Truth: Many long-term care policies offer several different options, so not all policies are necessarily the same as a result. When directly comparing LTC policies, there are five traits that primarily attribute to its price and quality:

  • Financial strength of the underwriting company
  • Daily benefit
  • Benefit period
  • Deductible
  • Inflation protection[5]

These qualities can vary considerably between LTC policies, their companies and are largely influenced by factors like target markets, state regulations on healthcare institutions and insurance practices, along with the state of healthcare quality and access in states.

Claim #4: "Assisted living facilities are regulated like nursing homes."

The Truth: This is a fairly common misconception. Although assisted living facilities are subject to a certain degree of regulation, it doesn’t compare to the degree imposed on nursing homes. While regulations are enforced on assisted living facilities at the state level, none are imposed by the federal government.[6] Although assisted living institutions can be regulated by states, the specifics will vary based on factors like pricing and the state’s senior population.

Claim #5: "I won’t need long-term care but if I do, I’ll wind up in a nursing home."

The Truth: The reality is about 70 percent of people over age 65 will need some form of long-term care.[7] On the contrary, roughly one-third of people older than 65 may never need long-term care support, however 20 percent of those who do will need it for more than five years.[8]

Even if you’re in a situation where long-term care is required, seniors can more often than not, get in-home care or help via assisted living facilities. In fact, over 80 percent of people receiving long-term care are in home and community-based settings—not nursing homes.[9]

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods.

Interested in discussing this topic further with a financial advisor? With offices in 23 states, there is likely a North Star financial advisor near you. Contact an advisor here.

Written by North Star Resource Group.


[1] 8 Myths About Aging And Long-Term Care, Forbes, October 10, 2018

[2] Myths of long-term care, Minnesota.gov, 10/25/2018

[3] Myths of long-term care, Minnesota.gov, 10/25/2018

[4] Costs of Care, longtermcare.acl.gov, October 10, 2017

[5] Separating Long-Term Care Insurance Myths From Realities, caregiver.com, August 10, 2017

[6] 9 Myths About Aging And Long-Term Care For Dummies, Forbes, October 18, 2018

[7] Busting 4 Myths AboutLong Term Care, thayerpartnersllc.com, November 13, 2015

[8] How Much Care Will You Need?, longtermcare.acl.gov, October 10, 2017

[9] Separating Long-Term Care Insurance Myths From Realities, caregiver.com, August 10, 2017

Tracking #/DOFU 11-2018

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