Recent changes announced in the healthcare sector in Ontario have prompted many of my clients to ask me about certain insurance products. So, I've decided to dedicate the next couple of blogs to different kinds of insurance. The first one I am going to write about is called "Long Term Care Insurance".
What is Long Term Care (LTC) Insurance?
Long term care insurance policies provide coverage if you become unable to care for yourself and need assistance to manage your activities of daily living (ADLs). To qualify for benefits, most plans state you must be incapable of performing two or more ADLs by yourself, such as bathing, dressing or eating.
Comprehensive policies may also include coverage for adult day care, assisted living, occupational therapy, rehabilitation and daytime assistance along with personal care tasks, such as bathing, dressing, eating and toileting.
Many of my clients thought that LTC services are free in Ontario, but unfortunately, it isn't. Long-term care is part of the province's health care system and publicly funded on a cost-shared basis with residents. The government does not pay the full cost of long-term care and requires residents to pay a portion of their “room and board” to the long-term care home. Did you know that the cost for a long-term stay at a government-subsidized nursing home can be over $2,000 a month? Privately owned retirement residence stay can cost on average over $3000 a month for a semi-private room and over $4000 for a private room.
So, you may want to consider LTC coverage if:
You’re concerned your retirement income might not last for your lifetime
You think your health might deteriorate significantly and government programs will be insufficient to meet your needs
You want the financial resources to help you choose the type and level of care that’s right for you, if and when you need substantial care
You want to protect your wealth and legacy from being depleted by the cost of care
Long term care insurance can help you:
Bring care into your home so that you do not need to downsize or move to a facility right away
Lessen the burden on care-givers and support your family financially if you are going to live with them when you need care
Manage your care and expenses if you have an unexpected severe accident, at any age, that results in your needing substantial assistance from a caregiver
What are the 5 key factors to consider when buying LTC Insurance?
Make sure you pay attention to the following:
The daily benefit amount
The amount of inflation protection
The length of benefit payments
The waiting period before benefits begin
Your current age
Upsides of LTC insurance are:
Peace of mind for you and your loved ones
Protects your retirement savings
Income-style plans allow you to spend funds on whatever you choose
Downsides of LTC insurance are:
Uncertainty in pricing and unpredictable premiums
Difficulty predicting the right amount of coverage to purchase
Extended waiting periods that may delay the payment of benefits
What alternatives do you have apart from LTC insurance?
If you anticipate that you may not qualify for long-term care insurance or have doubts about its value, other options exist to help you pay for your health care needs.
If you purchased a long-term disability insurance policy to protect your earning potential until retirement, ask your insurer about the possibility of adding a "conversion" option. In these circumstances, your insurer will add a rider to your policy allowing you to “convert” your "disability insurance" to "long-term care insurance" under certain circumstances.
Likewise, some insurers offer policy holders the option to convert "critical illness insurance" to "long-term care insurance" in exchange for an additional premium. Similar to disability insurance, critical illness insurance protects you from the adverse financial consequences of serious or life-threatening illnesses requiring treatment over and above your standard health coverage.
Purchasing a LTC insurance policy has many pros and cons. With a bit of research and planning, you can buy a policy that works for you and your loved ones. If you need help choosing the right insurance policy or have related questions, we at in4MED, can help by connecting you to our trusted local insurance brokers, and being there for you as your trusted health advocates. As always, feel free to connect with me or leave a comment.
Healthcare Consultant, in4MED
The author of this blog post is a Physician with over 10 years of experience working in the healthcare system as a clinician, researcher and educator. She is passionate about healthcare for older adults and strives to be a resourceful inspiration to caregivers.
*No content on this site, regardless of date, should ever be used as a substitute for direct medical advice from your doctor or other qualified healthcare professional.