What Is Long-Term Care?
What Is Long-Term Care?
For many people long-term care is synonymous with living in a nursing home. Actually, there are more options than ever to help you maintain comfort and dignity during a care need, including receiving care in your own home. Preparing for long-term care should address your health, wellness and personal preferences as well as your financial needs.
Help with Activities of Daily Living
Aging, accidents, illnesses and chronic conditions may limit your ability to care for yourself. When this happens, you need access to quality care. You also may need assistance with everyday, personal tasks. Licensed long-term care providers and long-term care facilities can help with these and other types of "activities of daily living:"
- Transferring (moving in and out of bed)
There are other everyday tasks that you may need assistance with, including:
- Managing money
- Taking medication
- Preparing and cleaning up after meals
- Shopping for groceries or clothes
- Using the telephone or other communication devices
- Caring for pets
- Responding to emergency alerts such as fire alarms
Access to Professional Care When You Need It
Long-term care needs may arise sooner than you think. Short-term access to long-term care can help you recover from a sudden illness or injury. For example, while recovering from hip surgery you may need rehabilitation therapy that requires several weeks or a few months at a nursing facility.
No one wants to think, “This could be me” and no one can predict the future. But, according to the U.S. Department of Health:
- Someone who is 65 today will, on average, need some type of long-term care services and support for approximately three years.
- Women generally need care for longer periods (3.7 years) than men (2.2 years).
- One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than five years.
Help at Home or in a Qualified Facility
Right now, you may have very strong feelings about where you want to live and who will take care of you — should the time come. Some prefer to have a spouse or adult child provide care at home. But caregiving puts demands and stress on your loved ones. A dedicated caregiver may have to give up a career, forego income, miss family time and ultimately sacrifice his or her own health and wellness.
Even in large families where adult children, siblings or other relatives want to share the load, the stress of the situation may change family dynamics or trigger disagreements.
A Highly Variable Expense
The cost of long-term care varies immensely depending on the type of care needed, where it is received and where you live. Many people turn to long-term care insurance options to pay for long-term care expenses.
Other people choose self-funding approaches to long-term care, which may require you to bear the entire cost burden yourself. To self-fund long-term care, you need cash savings or liquid assets like the equity in your home. If care is needed for an extended period of time, these resources can quickly deplete and affect the inheritance you can leave.
Innovative Financing Options
An alternative to traditional long-term care insurance is asset-based long-term care, which lets you use your assets to purchase a fixed whole life insurance policy or annuities that can provide benefits for qualifying long-term care expenses. And, if care is never needed, these approaches can provide benefits to your heirs.
Asset-based long-term care products also have the advantage of providing significant tax advantages, a cash value that can be accessed in an emergency and other customization options.
Asset-based Long-term care products provided by The State Life Insurance Company, a OneAmerica® company.
This information is provided for overview or general educational purposes only. This is not to be considered, or intended to be legal or tax advice. Changes in the tax law may affect the information provided. For personalized assistance, including any specific state law requirements consult a legal or tax advisor.
Throughout this material, the term life insurance is used. Please know that this term implies:
- The contract actually qualifies as life insurance according to Internal Revenue Code (IRC) Section 7702.
- The contract is not a modified endowment contract, or MEC, as defined in IRC Section 7702A.
- If it meets all of the requirements of Section 7702A, most of the distributions from your policy will be taxed on a first-in/first-out basis.
- If you choose to take loans or partial withdrawals, the death benefit payable to your beneficiaries will be reduced and surrender charges may apply to partial withdrawals.
- If the policy is a MEC, any distributions taken from the policy will generally be taxable – and subject to a 10 percent tax penalty if you're age 59½ or younger.
If a life insurance policy lapses with loans outstanding, the loan amount becomes subject immediately to federal income tax and if the insured is under age 59 ½, they may be subject to an additional 10 percent tax penalty.