Medicare and Long-Term Care Insurance: How They Work Together
As you approach your golden years, reliable access to medical services becomes more important than ever. This may mean paying for both Medicare coverage and a long-term care insurance policy.
However, it’s estimated that only about 3 to 4% of Americans 50 and older pay for a long-term care policy, according to LIMRA. Whether it’s due to financial holdups or misunderstandings, many U.S. residents assume long-term care is unnecessary when they have Medicare.
In reality, these two types of insurance play very different, but equally important roles in your late-in-life healthcare strategy. In fact, long-term care coverage and Medicare can work together to cover healthcare expenses if you need full-time care at any point.
At Senior Insurance Agency, it’s our job to help you understand all of your insurance options later in life. Let’s break down the difference between these two types of health insurance to help you better understand your coverage options.
First, What Is Medicare?
Medicare is a government-run health insurance program for people over the age of 65 and people with disabilities. It is designed to help older adults access the medical care they need at reasonable costs.
Medicare has several parts, each of which cover different types of expenses. These include:
- Part A: Medicare Part A covers hospital care, which includes inpatient hospital stays, short-term stays at a skilled nursing facility, hospice care, and home health care.
- Part B: Medicare Part B covers medical services like outpatient appointments, diagnostic tests, and medical equipment.
- Part C (Medicare Advantage): Medicare Advantage plans are Medicare plans offered by private insurers and regulated by the federal government. These plans are inclusive of both hospital care and medical services, and many also offer prescription drug coverage. Some Part C plans also offer dental, vision, and other add-on coverage types.
- Part D: Medicare Part D covers prescription drug costs. Like Part C, these plans are offered by private insurance companies but are regulated by Medicare.
- Medicare Supplements (Medigap): Medigap plans cover additional costs associated with Original Medicare, such as copays, coinsurance, and deductibles. These plans are standardized by the federal government and administered through private insurance companies.
In general, Medicare does not cover long-term custodial care costs. However, Part A does cover short term skilled nursing care and hospice care, as these are necessary medical services. Medicare also covers medical costs for nursing home residents.
What Is Long-Term Care Insurance?
As you might have guessed, long-term care insurance is a type of insurance policy that covers the cost of professional long-term custodial care and personal care. These policies are offered by private insurance companies, and coverage options vary between insurers.
Personal and custodial care are not covered by traditional health insurance. This is because this type of care involves assistance with dressing, bathing, eating, and other daily living activities. Since these are not technically medical services, they are not covered by Medicare.
Long-term care insurance works similarly to a life insurance policy in that you will start paying premiums several years or even decades in advance. Getting a long-term care policy at a young age can help you lock in lower premium prices.
AARP recommends purchasing long-term care insurance between the ages of 60 and 65, although this can vary depending on your circumstances. You also may not need long-term care coverage if you have extensive retirement savings.
There are several different types of long-term care covered under these policies. This could include:
- In-home care: A professional visits your home to provide assistance with daily tasks on a part- or full-time basis.
- Assisted living: A facility where residents receive support for some daily tasks, but retain independence when possible.
- Skilled nursing facility care: Patients receive care from registered nurses in a medical setting as well as assistance with daily tasks. Most patients will transition back to an assisted living facility or onto a memory care facility after receiving skilled care in a nursing facility, depending on their health status.
- Memory care facilities: A facility that offers both medical care and custodial care for patients with Alzheimer’s disease or other forms of dementia.
According to research presented by Single Care, seniors aged 65 or older have a nearly 70% chance of requiring long-term care services in the future. Although it may be difficult to envision needing such care in years to come, there’s value in preparing for such a likelihood.
Secure Your Future Care with the Right Coverage
Key Differences Between Medicare and Long-Term Care Insurance
Considering that Medicare and long-term care insurance serve two different purposes, there are understandably many differences between them. Let’s look at some of the big ones:
Coverage
Medicare is designed to cover medical expenses like hospital stays, exams, and medication. Long-term care insurance covers custodial care that does not involve medical services.
There are many instances in which a person may need both intensive medical care and custodial care. For example, patients in nursing homes have advanced medical conditions that require both skilled nursing and assistance with daily activities.
In this case, Medicare covers the skilled nursing services, while long-term care insurance covers custodial costs.
Costs
Both Medicare and long-term care insurance have monthly premiums. According to the Centers for Medicare and Medicaid, most people don’t pay a premium for part A, and the standard premium for Part B is $174.70 per month. Premiums for Parts C, D, and Medigap vary by policy.
Medicare also comes with copays and coinsurance for some services, as well as an annual deductible you must meet before coverage kicks in. Medigap plans can cover some or all of these additional expenses.
Long-term care insurance comes with an annual premium, rather than a monthly premium. According to the American Association of Long-Term Care Insurance, the average premium for a 60-year-old man with $165,000 in coverage is $1,200 annually. This amount can increase or decrease depending on your total coverage amount, your health status, and the age at which you purchase your policy.
How Medicare and Long-Term Care Insurance Work Together
Medicare and long-term care insurance are not mutually exclusive. In fact, long term health care and Medicare complement each other to ensure you get the care you need as you age.
Medicare’s Role
Medicare is essential for covering medical expenses as you age. This includes things like short-term stays in a skilled nursing facility or hospice care, or medical costs associated with memory care. However, Medicare does not cover help with daily tasks and personal care.
Depending on your income, you may also qualify for Medicaid coverage. Medicaid covers long-term care and custodial care for beneficiaries below a certain income threshold.
Long-Term Care Insurance’s Role
Long-term care insurance can fill in the gaps in scenarios where Medicare does not cover custodial care. It is particularly helpful for beneficiaries who require intensive memory care, or beneficiaries with limited mobility who require support with daily tasks.
You can apply for long-term care insurance at any age. The application process typically requires extensive underwriting based on health screenings and your family health history.
Find the Best Plan for Long-Term Care Needs
Making Informed Decisions for Yourself
Finding the right combination of insurance policies for you will depend heavily on factors like your income, your current and future health needs, and your healthcare preferences.
When selecting your Medicare and long-term care plans, we recommend speaking to a senior insurance agent for personalized guidance. Working with a financial advisor can also be very helpful when making long-term plans to ensure that important expenses aren’t overlooked.
Explore Coverage Options With Senior Insurance Agency
Whether you’re already on Medicare or will become eligible in the near future, now is a great time to evaluate your current insurance coverage. While Medicare covers a range of medical expenses, it doesn’t necessarily cover long-term care, so an additional policy may be necessary.
At Senior Insurance Agency, we help clients with Medicare in Carson City and throughout the state of Nevada. We know one size doesn’t usually fit all, and we’re happy to walk you through the complexities of Medicare plans as well as long-term care coverage.